Industry News

Title insurers question California’s right to regulate rates

Industry reacts to proposal to rollback rates by $1 billion a year

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SAN FRANCISCO -- California regulators have yet to prove a lack of competition in the title insurance industry that would give the state the legal authority to move forward with a plan to roll back and cap rates, industry advocates said Wednesday at a public hearing on proposed new regulations. Insurance Commissioner John Garamendi wants to roll rates back to where they were six years ago, before a run-up in housing prices. The rollback would cut title insurance rates by an average of 23 percent, and slash fees for escrow services provided by title companies by 27 percent, saving consumers $1 billion a year, Garamendi says. The rollback, which would be implemented in March, is envisioned as an interim measure while regulators set a cap on title insurance rates using a complex formula intended to limit excessive profits by tying rates to insurers' actual costs. Beginning in 2008, title insurance companies would be required to submit detailed information on their costs, and profits w...