Yet another huge article that was obviously written by someone who has no understanding of the industry.  First, in California the premium includes the cost of the title search - so it isn't just the "insurance."  At least that is how it was explained to me a couple of years ago. 

Next, the author claims that the "on-line" records virtually eliminate the risks of title insurance. I highly doubt that premise.  As David Bloys has pointed out to us many times, the crooks have access to the same records and it makes it easier for them to commit title fraud.

Lastly he praises the Iowa Title Guarantee Program as a better solution.  On this point I agree with him.  However, Iowa's program has been so successful because they adhere to strict title standards and they require their "licensed" abstractors to search the titles.  This, at least in my view, proves that the answer to reducing costs to the consumer is spending more money on the search, the front end of the process, in order to reduce risk.

It is not really fair to characterize the premiums for title insurance in such a manner.  It is not the claims they pay that makes the insurance so valuable, it is the work, mainly the title search, that protects the insured by taking care of any potential problems before the policy is issued.  The problem today is that the major underwriters have reduced their standards to the point where it is almost meaningless.  They have taken the value out of the process for the consumer.

The ridiculously insufficient search standards for insurability, their dependence on on-line records, and the "corruption in the industry" (as the author describes it) have made the title insurance industry a ripe target for this type of attack. 

I whole heartedly agree that the system is in dire need of reform.  However, they are going about it the wrong way.  I have said many times that the abstractors need to be licensed and held to higher standards, all the while, the opposite has occurred.  The abstractors are less knowledgeable know than ever before and the standards required by the insurers have been whittled down to the bare minimum allowing for "acceptable risks."  Until some integrity is restored to the process, the critics will have plenty of fodder for their cannons. 

Best,
Robert A. Franco
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