Fidelity National Title Insurance Group has agreed to refund more than $600,000 to nearly 4,000 title insurance policyholders in Arizona as a result of a multi-state settlement, the Arizona Department of Insurance said late Wednesday.

 

Fidelity is refunding $644,152 to 3,946 title insurance policyholders in Arizona, the insurance department said. The refunds stem from Fidelity’s captive reinsurance arrangements with home builders (Meritage and William Lyons), lenders (CitiGroup and Wells Fargo) and a real estate brokerage (RE/MAX), the department said in a statement.

 

Alleged kickbacks in the real estate title insurance arena have taken center stage this year, sparked by a Colorado inquiry into title insurance practices. John Garamendi, California’s insurance regulator, announced in July that three major title insurers would pay more than $37 million to settle charges of kickbacks to lenders, builders and real estate agents.

 

The Fidelity title insurers active in Arizona that are making the refunds are Fidelity National Title Insurance Company, Chicago Title Insurance Company, Ticor Title Insurance Company, and Security Union Title Insurance Company, the insurance department said.

 

The department joined efforts with state insurance regulators in Colorado and 17 other states to obtain refunds for title insurance consumers in Arizona and across the country, according to a statement issued Wednesday.

 

Under the arrangements alleged by the department, Fidelity shared a portion of consumers’ title insurance premium and risk with these captive reinsurers resulting in a potential benefit to the reinsurer, or its owners.

 

The department questioned the legality of these sharing arrangements as possible violations of the Arizona anti-inducement statute that prohibits title insurers from paying an inducement to obtain title insurance business.

 

To resolve the investigation, Fidelity has agreed to refund the shared portion of the premium and will mail the refunds, which average $163, within 120 days, the department said.

 

The department said that Arizonans who closed real estate purchases between January 2001 and early 2005 should review their title insurance documents to see if their home purchase involved one of these title insurers, as they might be entitled to a refund.

 

Policyholders that have questions about their eligibility for a refund can visit Fidelity’s Web site, the department said.

 

In July, three major title insurers settled with John Garamendi, California’s insurance regulator, in a probe of their practices.

 

The companies were accused of paying $25.4 million in illegal kickbacks to various lenders, builders and real estate agents in exchange for the referral of title insurance business. The title insurers settled without admitting wrongdoing.

 

Garamendi, who is also co-chair of the Title Insurance Working Group within the National Association of Insurance Commissioners, has worked with Colorado and Washington state insurance regulators to probe a series of alleged phony reinsurance contracts between title companies and subsidiaries of real estate agents, developers and lenders.

 

***

 

Send news tips or a letter to the editor to janis@inman.com.

 

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