Shopping for title insurance online? Why your title agency’s underwriter matters
As a small company, we have competed for many years with several title companies for online business. In the last few years, we have been seeing some heavy discounting from new players in the industry who are both title agencies and insurance underwriters. Though not unheard of in our industry nor illegal, the pervasiveness of it is both interesting and worrisome for consumers shopping online for their title insurance.
Think of this like Progressive or Geico being sold through an independent auto insurance agency located in your neighborhood versus calling the Progressive or Geico 1800# direct. Same product, but a different way of buying the same thing. In the case of Progressive and Geico, you don’t get different pricing by calling the 800 #direct. But their aggressive direct consumer marketing campaign in effect, (remember the cute talking gecko?) did put many mom and pop agencies out of business and eventually reduced the options consumers had for auto insurance. However, Geico and Progressive are publicly traded companies backed by billions of assets and reserves. These assets and reserves protect the consumer if for example, they have a car crash and need Geico or Progressive to pay for the repair. Chances are pretty good they will pay.
In the case of title insurance, it is not all the different. Except consumers understand title insurance less and who the players are in title insurance underwriting even lesser. Underwriting is sort of the “mother ship” of the title agency concept. The financial backing behind your Owners Title Insurance Policy Owners title policy sample is actually “sponsored” by an insurance company and is sold to you through a title agency. The difference in the end, could be between buying Auto Insurance from Billie’s Super Discounted Auto Insurance of Kendall or State Farm, but consumers are pretty oblivious to the risk involved with title insurance.
When it comes to national title insurance underwriters in the US, there are about a dozen, all owned by basically 2-3 multinational companies: First American Title, Fidelity National Title and Old Republic Title, depending who has merged with who that month.
When we, as a small title company, look to become an agent for an underwriter who will insure our client’s real estate purchases (think of it like Geico insuring your car, even though you paid for it at an independent agent right in your neighborhood – that’s us!), we look for 3 main things: 1. their coverage (Only FL versus nationwide) 2. their financial stability ( earnings, liabilities, reserves) and 3. their reputation for timely payment of title defects when a valid claim is filed. With this we can establish how well things are likely to go for our clients, should a valid title defect/claim come around. Consumers needs to do basically the same thing we do when shopping for title insurance – their due diligence on the title insurance underwriter their agency is using. After all, a house is significantly more expensive than a car.
For example, a major title insurance player online is Entitle Direct. They are both a title agency and a title insurance underwriter. This in itself is not a problem, underwriters can and do handle their own closings. The difference is who the underwriter is and where do they stand financially? Here is the public information on Entitle Insurance versus, for example, the underwriters we represent, Old Republic and Fidelity National Title:
EnTitle Insurance – Premiums written in 2012 $12.7 million; assets $21.8 million; liabilities $6.5 million; estimated net worth $15 million. Coverage in 40 states.
Fidelity National Title Insurance– Premiums written 2012 $1.4 billion; assets $1.3 billion; liabilities $950 million; estimated net worth $400 million. Coverage in 50 states.
Old Republic Tile Insurance– Premiums written $1.5 billion; assets $808 million; liabilities $464 million; estimated net worth $355 million. Coverage in 50 states.
These three companies paint a very different financial picture. Fidelity and Old Republic net worth is almost 25 times or more that of Entitle Insurance who provides coverage in 40 states.
Bottom line is, you cannot ignore your title insurance agency’s underwriter’s bottom line.
Ask your agency who their underwriter is and learn as much as you can about them.