California's title insurance rate rollback (NOT) scuttled

It's looking like California's new insurance commissioner, Silicon Valley entrepreneur Steve Poizner (pictured), won't have to decide whether to implement his predecessor's plan to roll back title insurance rates and escrow fees by $1 billion a year.

Legal experts who review proposed changes to California regulations say they won't sign off on former Insurance Commissioner John Garamendi's proposal to roll back and cap rates. A written decision detailing the notice issued today by the Office of Administrative Law, is due within a week.

The California Land Title Association and the Escrow Institute of California immediately issued press releases celebrating the decision.

"We feel entirely vindicated in our belief that the regulations exceeded the Department’s statutory authority under the Insurance Code by illegally impairing competitive rate making and by replacing competition with government dictates in the title insurance marketplace," CLTA Executive Vice President Craig Page said in a statement.

Page said the Department of Insurance can reduce rates it's approved only if it can demonstrate they are unreasonably high and that a reasonable degree of competition does not exist.

Garamendi, who was elected lieutenant governor in November, commissioned a study published in December 2005 that alleged a lack of competition in the state's title insurance industry. The industry disputed the study's findings at hearings in August, 2006 (see Inman News story).

UPDATE: Poizner issued a strong statement Thursday saying that he agrees title insurance rates are too high, that there is a lack of competition in the industry, and that he supports the rate roll back. The OAL notice, he says, involves minor issues of clarification, which he expects to resolve. See Inman News story. 

--Matt Carter, Inman News

All rights reserved. This content may not be used or reproduced in any manner whatsoever, in part or in whole, without written permission of Inman News. Use of this content without permission is a violation of federal copyright law.