FOR IMMEDIATE RELEASE
NEW YORK APPROVES 15 PERCENT CUTS IN TITLE INSURANCE RATES
Homeowners to Save Hundreds of Dollars at Closings
Superintendent of Insurance Howard Mills and Attorney General Eliot Spitzer today announced that the New York State Insurance Department has approved 15% rate reductions for title insurance companies that cumulatively have 93 percent of the states market share. The new rates take effect immediately. Title insurers in New York collected an estimated $1.2 billion in written premiums in 2005.
"These title insurance rate reductions will save consumers hundreds of dollars when they close on the purchase of a new home," said Superintendent Mills. "New Yorkers have been paying too much for title insurance for too long because internal industry practices, rather than market forces, were driving the products price."
"This is great news for consumers and we are encouraged to see more widespread price reductions in the New York title insurance market. We will continue to examine title insurance in New York with an eye towards eliminating illegal practices that may still be inflating rates," said Attorney General Spitzer.
New Yorkers, for instance, who purchase for $200,000 an upstate property will now pay on average $952 for title insurance, down from $1,120. The percentage rate decreases remain the same, but the dollar savings are higher, for buyers in downstate counties. For example, an individual who acquires a downstate property valued at $500,000 will see their typical title insurance costs drop to $2,125 from $2,500.
The state-licensed title insurers who received Insurance Department approval to cut their rates, and the statewide market shares for them and their subsidiaries as of Dec. 31, 2005, include:
- Fidelity National Financial Group (33.3%)
- First American Title Group (24.6%)
- LandAmerica Financial Group, Inc. (20.4%)
- Stewart Title Companies (12.7%)
- Washington Title Insurance Company (1.7%)
The rate reductions approved for Fidelity National Financial Group and First American Title Group, and their subsidiaries, were part of the settlement agreements the Insurance Department announced with the New York Attorney Generals Office on May 23, 2006. Those agreements concluded a joint regulatory investigation into allegations related to illegal rebates and referral fees and also called upon companies affiliated with both Fidelity National Financial Group and First American Title Group to reduce their rates by 15% going forward for properties they insure that are valued at no more than $1 million.
The now-concluded probes into Fidelity National Financial Group and First American Title Group revealed evidence of illegal schemes by which real estate developers would have their title insurance fees waived or discounted in other states in exchange for giving their New York business to Fidelity National Financial Group or First American Title Group companies.
These discounts were not available to home purchasers and small businesses, who in effect subsidized the illegal rebates by paying higher title insurance rates in New York. The investigation also found that Fidelity National Financial Group and First American Title Group companies paid illegal referral fees to their customers representatives.
Title insurance protects the buyer and mortgagee in a real estate transaction by ensuring that the seller has legal title to the subject property. A title search is performed by the title insurance company, title insurance agent, or an attorney prior to the closing. This search will reveal, among other things, whether any liens or claims are pending against the property and ascertain whether the seller has good and clear title to the property.
The New York State Insurance Department will hold a public hearing later this year to review title insurance rates and related matters.