The New York State Insurance Department approved a 15 percent rate reduction for title insurance in the state after New York Attorney General Eliot Spitzer launched an investigation into illegal rebates and referral fees among top insurers in the state.

The state’s insurance department approved rate reductions for title insurance companies that cumulatively have 93 percent of the state’s market share.

“These title insurance rate reductions will save consumers hundreds of dollars when they close on the purchase of a new home,” Superintendent of Insurance Howard Mills said in a statement. “New Yorkers have been paying too much for title insurance for too long because internal industry practices, rather than market forces, were driving the product’s price.”

Mortgage lenders and banks require consumers to purchase title insurance when borrowing money to buy a home or refinance an existing mortgage to ensure they have a clear title on the property.

New Yorkers who purchase an upstate property for $200,000 will now pay on average $952 for title insurance, down from $1,120. The percentage rate decreases remain the same, but the dollar savings are higher, for buyers in downstate counties. For example, an individual who acquires a downstate property valued at $500,000 will see their typical title insurance costs drop to $2,125 from $2,500.

The state-licensed title insurers who received Insurance Department approval to cut their rates, and the statewide market shares for them and their subsidiaries as of Dec. 31, 2005, include: Fidelity National Financial Group (33.3 percent); First American Title Group (24.6 percent); LandAmerica Financial Group (20.4 percent); Stewart Title Cos. (12.7 percent); and Washington Title Insurance Co. (1.7 percent).

Spitzer in May announced settlement agreements with Fidelity National Financial Group and First American Title Group over investigations into the practice of making illegal payments to agents and customers in exchange for business.

The rate reductions approved for Fidelity National Financial Group and First American Title Group, and their subsidiaries, were part of the settlement agreements announced in May that concluded a joint regulatory probe from the insurance department and attorney general’s office. The companies also agreed to pay a $2 million fine.

The probes revealed evidence of illegal schemes by which Fidelity National Financial Group and First American Title Group waived or discounted title insurance fees to real estate developers in other states in exchange for giving their New York business to the companies.

These discounts were not available to home purchasers and small businesses, who in effect subsidized the illegal rebates by paying higher title insurance rates in New York, according to Mills and Spitzer. The investigation also found that Fidelity National Financial Group and First American Title Group companies paid illegal referral fees to their customers’ representatives.

The new rates take effect immediately. Title insurers in New York collected an estimated $1.2 billion in written premiums in 2005, according to the state insurance department.

“This is great news for consumers and we are encouraged to see more widespread price reductions in the New York title insurance market. We will continue to examine title insurance in New York with an eye towards eliminating illegal practices that may still be inflating rates,” said Attorney General Spitzer.

The New York State Insurance Department will hold a public hearing later this year to review title insurance rates and related matters.


Send tips or a Letter to the Editor to or call (510) 658-9252, ext. 133.

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