Industry News

Stewart Title settles captive reinsurance claims for $1 million

California regulators had sought $41.6 million in penalties

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Stewart Title Guaranty Co. has agreed to pay California regulators $1 million to settle allegations that it paid illegal kickbacks to builders, lenders and title agents in exchange for title insurance business. In its complaint against Stewart Title, the California Department of Insurance had sought $41.6 million in fines and penalties for allegedly paying out $500,000 in illegal rebates to affiliated businesses as part of a captive reinsurance scheme that generated 3,908 title insurance policies. Captive reinsurance companies created by home builders, lenders and title agents were paid up to 50 percent of the title insurance premiums from the policies, investigators said. The rebate payments, made between 1998 and 2006, were illegal because reinsurance companies owned by or affiliated with Lennar Homes, Wells Fargo Home Mortgage and other settlement services providers received payments when no real transfer of risk took place, investigators said. Stewart Title, which the Department ...