California regulators plan to collect more detailed information on title insurers’ affiliated businesses, and will prohibit title insurance marketers from spending more than $25 per year on gifts or other inducements for real estate professionals who are in a position to refer business to them.
Insurance Commissioner Steve Poizner announced the planned regulatory reforms Monday in San Diego, where he addressed members of the California Land Title Association (CLTA) at their 101st annual convention.
"Improper kickbacks and other excessive marketing costs are being passed directly onto the consumers," Poizner said in a statement, promising the state will soon release regulations aimed at "eliminating abuses and excess costs in the system."
California law currently requires title insurance businesses to obtain more than 50 percent of their business from unaffiliated sources. The Department of Insurance will soon require companies to provide detailed information about their affiliated businesses, Poizner said, allowing it to enforce the law.
CLTA Executive Vice President Craig Page said the group would seek input from member companies before commenting on Poizner’s proposal.
Washington state, which limits annual spending on gifts and other inducements to $25 per person, last year fined four title insurers nearly $300,000 for alleged violations. The Washington State Office of the Insurance Commissioner is also seeking $1.95 million in fines from Stewart Title for 195 alleged violations of the rule.
Washington state lawmakers this year enacted legislation that will allow the Insurance Commissioner to begin regulating title insurance rates in 2010. Senate Bill 6847 also includes new restrictions on inducements and affiliated business arrangements.
Poizner last year stepped back from a plan by his predecessor to roll back title insurance rates by $1 billion and introduce cost-based rate caps, saying he wanted to give the industry more time to reform itself (see Inman News story). If implemented, California’s plan to limit title insurance rates based on cost data supplied by companies won’t take effect before 2011.
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