LandAmerica Financial Group will contribute $1 million to the Arizona chapters of the American Red Cross to settle a probe into the company’s practices by the state insurance department.
This is the second settlement between the department and a major title insurer to be announced this week. On Thursday, Fidelity National Title Insurance Group announced that it has agreed to refund more than $600,000 to nearly 4,000 title insurance policyholders in Arizona as a result of a multistate settlement.
The $1 million LandAmerica donation will benefit state residents and Hurricane Katrina refugees brought to Arizona.
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.
“We got creative with this because LandAmerica absolutely would go to litigation and refused any (consumer) refunds,” state Insurance Director Christina Urias told the Arizona Republic Thursday.
“We got LandAmerica to do it this way.”
Lloyd Osgood, a LandAmerica spokeswoman, said the company would not issue refunds because it believed no consumer paid more for title insurance. She said the settlement was a way to “put the issue behind us.”
Osgood said LandAmerica and the Arizona DOI concurred that no Arizona consumer paid more for title arrangements “and because we agreed we were able to work together to reach resolution. We wanted to help those affected most by Hurricane Katrina.”
In addition to providing $1 million to the Red Cross, LandAmerica also will establish a $250,000 title insurance education fund to teach Arizonans about title insurance.
The state also announced that it has started an investigation into business relationships between national title insurance companies and Phoenix-area real estate firms, the Republic reported.
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.
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