Dig inside the title insurance industry for local stories

If there were ever a time that business journalists should focus on the title insurance industry, it’s now.

It’s been about a year since a federal law has required lenders to give homeowners accurate estimates for closing costs, including title insurance, early in the buying process. Several state governments are scrutinizing their regulations on how they approve title insurance prices. Larger insurers are facing increasing competition from at least one company with new business model that can offer significantly lower rates.  And the recent increases in refinancing means that more title insurance is being sold lately.

While the time is ripe for reporting on this industry, writing an interesting investigative piece may seem daunting. But in fact, the title insurance industry is not as complex as you might imagine.

Title insurance protects lenders from any unforeseen claims on a property. It’s a one-time payment and the insurance lasts for as long as the homeowner owns the home or refinances. Typically, insurers market to real estate agents, who then recommend the policy to homebuyers, who generally accept what they’re presented.

DIGGING IN FOR LOCAL ANGLES

Here are a few ways you can get started on looking at the way your local title insurance industry works.

The best first step is to understand how your state monitors title insurance. The industry is generally regulated at the state level, so reporters who keep a state focus should have the best luck finding unique stories.  Does your state take a hands-off approach or does it dictate prices? How does your state’s policy on title insurance affect the price for consumers? Are the rates competitive? And what’s the impact on the insurers?

Many states like California and New York approve the insurance prices that companies want to charge. Other states like Texas and Florida just set the cost that all insurers there have to follow. Then there are states like Oklahoma and Hawaii that do not regulate the industry at all, creating a more competitive market.

To find out what the situation is in your area, contact your state’s insurance department.  The National Association of Insurance Commissioners and the Center for Insurance Policy have a website with a list of all state insurance departments and those state insurance departments should have a list of all their registered title insurers. Many states provide that information online, often under a “For Consumers” heading.

Secondly, check whether your state has a “rating bureau.” These are groups of title insurers that agree to charge the same price for title insurance. If your state has a rating bureau, what is its impact on the market? Are there any political efforts to disband the bureau? In New York, for example, all title insurance companies are members of the same rating bureau except one, and the rates between the two are significantly different. As a result of noncompetition in the industry, New York is considering a government version of title insurance for consumers.

Check out any similar legislation on title insurance in your area. Have any laws recently passed that may impact the industry and the price of title insurance? For example, Washington D.C.’s new policy requiring title insurers get their rates approved took effect in January and the district is still approving rates. New or pending laws on title insurance are infrequently covered by the media, so look for legislation on your state government’s website instead of running a general online search for news articles.

Other sources you can turn to are The American Land Title Association and your state’s land title association. These are industry groups that monitor and participate in policy changes related to title insurance. The media contact for the national group is Jeremy Yohe (jyohe@alta.org or 202-296-3671.) The Chief Executive Officer is Kurt Pfotenhauer (kpfotenhauer@alta.org.)

The National Association of Independent Land Title Agents can provide another perspective on the title insurance industry. The contact there is Charles Proctor III, president of the Pennsylvania-based group, at 610-361-8600.

And check bankrate.com to see where your state’s closing costs compare to other states. The website breaks down average closing costs to include the average title insurance on a $200,000 home loan.

Finally, be careful not to vilify the title insurance companies.  Many sources will likely tell you that title insurance rates are artificially high and that the insurers are unfairly banding together. That may or may not be correct, but keep in mind that, so far, courts in many cases have found that title insurance companies are in compliance with the law when setting rates. As usual, keep your writing on that balanced and objective.

QUICK TIPS

• Find out if your state sets insurance rates, approves the rates set by insurers or if there are no regulations on the industry. Contact your state insurance department to find out.
• Research whether your state has a title insurance rating bureau, which is a group of title insurance companies that agree to charge the same rate for policies.
• Look up past and pending state legislation regarding title insurance.
• Check the most recent market share report provided by the American Land Title Association and compare it to previous reports to see which companies are gaining market share.
• Remember that insurance companies, which set the rates, are different from insurance agents, which are smaller companies that sell the policies for the larger insurance companies.  Try to include both as sources in your story.

MORE RESOURCES

• American Land Title Association, or ALTA, is the national trade group and is based in Washington D.C. The press contact is Jeremy Yohe, director of communications, at jyohe@alta.org or 202-296-3671. www.alta.org
• For your local land title association, go to www.alta.org, click under “Meetings,” then “State Land Title Associations.”
• The National Association of Insurance Commissioners & The Center for Insurance Policy and Research has a state-by-state list of state insurance departments, many of which regulate title insurance: http://www.naic.org/state_web_map.htm
• The National Association of Independent Land Title Agents, based in Chadds Ford, Penn., has another perspective on the industry: www.nailta.org. Contact Charles W. Proctor III, president of NAILTA at 610-361-2655.

FAST FACTS ON TITLE INSURANCE

• Homeowners are required by lenders to buy title insurance to protect against prior problems with the property, such as unforeseen liens or missing heirs coming forward.  Many homeowners also purchase a separate owner’s policy for themselves.
• Title insurance is a one-time payment that last as long as the homeowner is in the home or refinances their mortgage. Homeowners have to buy a new title insurance policy when they refinance.
• Title insurance is often the most expensive part of closing costs.