Industry News

Stewart Title accused of engaging in captive reinsurance scheme

California Department of Insurance seeks $46.7 million in damages

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The California Department of Insurance is seeking $46.7 million in damages and penalties against Stewart Title Guaranty Co. for an alleged captive reinsurance scheme affecting 3,650 homeowners. California Insurance Commissioner John Garamendi on Monday accused Stewart Title of channeling illegal kickbacks to shell companies created by home builders and lenders in exchange for business. Garamendi alleges the shell companies had no offices or employees and were created with the sole purpose of receiving kickbacks related to unnecessary "reinsurance" agreements. According to the Department of Insurance's accusation, Stewart Title paid up to 50 percent of the premiums on the policies -- a total of $443,000 -- to the shell companies between 1999 and 2005. "Consumers and their wallets are being taken to the cleaners by title insurers who inflate their bottom lines through these schemes," Garamendi said in a prepared statement. Stewart Title maintains that California has not iss...