Industry News

Stewart Title accused of captive reinsurance scheme

$41.6 million in fines and penalties sought for $500,000 in premium rebates

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California regulators are seeking $41.6 million in fines and penalties from Stewart Title Guaranty Corp. for alleged captive reinsurance schemes with home builders, lenders and a title agency. The California Department of Insurance alleges that Stewart Title paid $500,000 in illegal rebates to companies owned or affiliated by its partners in the scheme in exchange for referrals that generated 3,908 title insurance policies. Stewart Title allegedly made the payments from 1998 to 2006, to reinsurance companies owned by or affiliated with Lennar Homes, Wells Fargo Home Mortgage and other settlement services providers. The payments, made from premiums paid by policyholders, amounted to illegal kickbacks for the purpose of generating referrals, because no real transfer of risk took place to the reinsurance companies, the Department of Insurance alleges. Stewart Title, Lennar Homes and Wells Fargo did not respond to requests for comment from Inman News. The allegations are directed only at...