Hey Slade,
It is telling that you would ask the question. This goes to show you that most Americans that do not understand title insurance have that "WOW" reaction to the Forbes article. I am actually impressed with the ALTA response that Jay provided the link to (http://www.alta.org/images/PDF/061031-forbes_response.pdf). It does a pretty good job of explaining why title insurance only pays out only 5% in claims.
It is typical for the agent to retain between 70% and 90% of the premium, depending on the volume of policies they write. The agent is the one who is responsible to searching the title (or contracting it out and paying for it), examining the search for potential problem, correcting them, and getting the new documents filed to perfect the owners' or lenders' interests.
There is much more work that needs to be done to issue title insurance than any other casualty line. Auto insurance, for instance, the agent merely has to look at a rate table, print out a policy, and collect the premium. They don't have to do anything else until their insured has an accident. Then they have to send out an adjuster, compute the loss and coverage and issue a check.
In casualty insurance, most of the premium dollars are spent after a claim. In title insurance, the majority of the work is done prior to insuring the property to try to eliminate the risk of a claim.
My only complaint with the title industry is that they don't spend enough of their upfront work on the title search. They have reduced the search standards which leaves the insured with a higher risk and exposes the company to higher claims. It would be a much better system if they actually hired well qualified examiners and abstractors, provided better compensation to them, and restored the integrity to the title policy.
Best,
Robert A. Franco
SOURCE OF TITLE
to post a reply:
login - or -
register