Put an end to title insurance rip off in Florida

By A TIMES EDITORIAL
Published August 26, 2007

Let's get right down to it: Title insurance in Florida is a rip off. It costs too much for what the consumer gets, accounting for an average 14 percent of the consumer's closing costs in property transactions. Yet insurers face little risk considering only 3 cents of the premium dollar is ever paid out for losses. Consumers would get a better deal at the craps table.

State regulators are reviewing the title insurance industry, as required by law, and have had to subpoena companies to get them to fully cooperate. Despite the secrecy, regulators have managed to uncover some startling details. The most obvious problem is that the business isn't really competitive, with just five companies writing 90 percent of policies sold in the state. Consequently, industry profits were up 386 percent from 1995 to 2004.

Florida's Office of Insurance Regulation seems to be taking its duties seriously. In fact, the inquiry "could rise to the antitrust level," said Steve Parton, general counsel for the office.

The average title policy in Florida cost $2,050 last year, and comparative shopping is difficult. Although lenders require the insurance to make sure a title is clear of liens or other impediments, consumers must buy the policy. They are often steered to a particular title company by real estate agents, builders or lenders, who might have a financial arrangement with the insurer. If lenders had to purchase the policies instead of consumers, there would be more motivation to lower premiums.

All of that probably explains why Florida has the first or second highest rates in the nation, according to Parton. Premiums here are more than double the rates in neighboring states.

Once their study is complete, insurance regulators should take whatever action is necessary to make title insurance rates fair. And they should go further, recommending true reform of the industry to the Legislature. Then it will be up to lawmakers, and that's when we'll see what the title insurers have been doing with their profits - hiring the best lobbyists to protect their sweet deal.

[Last modified August 25, 2007, 22:03:57]