Title: ALTA FEDERAL CONFERENCE
1ALTA FEDERAL CONFERENCE
March 7-8, 2006 Washington, D.C.
2OVERVIEW
- Identify current climate, key issues and
opportunities - Provide a set of messages members can use
- Ensure that we are all forwarding positive,
consistent messages
3CURRENT CLIMATE
- Reinsurance issue in 2005
- Birnbaum report in California
- Colorado DOI investigation into ABAs
- Agent defalcations (CO, NY)
- U.S. Rep. Michael Oxleys letter to the GAO
4KEY ISSUES MISPERCEPTIONS
- Title insurance costs too much
- Claims are low compared to other lines of
insurance, so you are overcharging - There is a lack of competition in the title
industry, keeping costs high - Technology should lower prices
- Monoline restrictions keep competitors out of the
market - Iowa has a better title insurance system
- The title industry has engaged in bad conduct
5KEY ISSUES MISPERCEPTIONS
- There may also be questions raised about
- The GAO Study
- RESPA Reform
- Federal Regulation of Insurance
6OPPORTUNITIES
- Educate our audiences about title insurance.
- Clear up the misinformation and confusion.
- Communicate the value and benefits of this
important protection.
7TOP 10 MISPERCEPTIONS QUESTIONS
81 COST
- Some have criticized the cost for title
insurance. Are premiums in line with the value of
the product? - A one-time premium covers the life of a loan
and/or property ownership. For the price, its a
bargain. - Rates are heavily regulated.
- Rates must ensure reserves and solvency of
insurers.
92 CLAIMS
- Why do title insurers only pay 5 of premiums in
claims when property and casualty companies pay
70? Arent you gouging consumers to increase
your profits? - Title insurance is based on loss prevention
rather than loss assumption. The majority of our
costs are on the front end. - Our expenses total 90 of the premium dollar
compared to PC companies at approximately 25.
103 COMPETITION
- When closing services are largely selected by
disinterested third parties (i.e. real estate and
mortgage professionals), doesnt that foster a
non-competitive atmosphere, at least in terms of
price? - In truth, consumers choose not to get involved in
the process. - Title companies compete fiercely for business
with third-parties. - Consumers should be helped to understand why they
need this important protection. - ALTAs Web site has information to help consumers
make informed decisions.
114 TECHNOLOGY
- Havent advances in technology made it easier to
do a title search, and shouldnt prices reflect
that? - Title searches are not like a Google search.
- Only 10-15 of counties have automated title
files. - Most rely on manual searches of paper-based
archives. - Counties dont have the budget to automate title
data. - Private title plants are expanding, but
represent a considerable cost.
125 MONOLINE
- What are monoline restrictions, and are they
still applicable today? Dont they prevent
competitors from entering the market, which would
lower prices? - Monoline restricts companies writing certain
high-risk lines of insurance to writing only
those lines. - Monoline ensures the reserves and solvency of
insurers for the protection of policyholders. - Non-title insurers lack appropriate reserves and
underwriting experience for title insurance.
136 IOWA SYSTEM
- Iowas system of title insurance is run by the
state. Why havent other states followed Iowas
example? - Most Iowa mortgages are insured out of state.
- Only half of title losses are covered by Iowa
system. - As a government-run monopoly, there is no
competitive incentive to keep pace with markets
and consumer needs.
147 INDUSTRY CONDUCT
- We keep hearing about agent defalcations,
kickbacks, and regulatory actions being taken
against title companies. Is this an
industry-wide problem? - Every industry has its share of bad apples and
fraudulent activity. - Fraudulent practices should be prosecuted to the
full extent of the law. - ALTA supports practices that are compliant with
the laws and regulations governing the title
industry.
158 GAO
- Why is the GAO looking into the title industry?
- The complexity of our business has created
misinformation and misunderstanding about title
insurance. - ALTA met with and is assisting the GAO fully.
- We view this as an opportunity to clear up the
confusion that exists in the marketplace.
169 RESPA REFORM
- Does the title industry support RESPA reform, and
how will that impact your business? - ALTA supports HUDs efforts to make the home
buying process more transparent for consumers. - ALTA actively participated in all HUD-sponsored
workshops last year. - It is unknown when HUD might publish a proposed
rule, or what that rule might include.
1710 FEDERAL REGULATION OF INSURANCE
- What about regulating title insurance at the
federal level. Will that work? - No.
- Title insurance is very tied to local customs and
laws. - It represents an enormous undertaking to
establish federal regulations that reflect
variations in all 50 states. - State regulators can respond to the local
marketplace more quickly.
18OPPORTUNITIES AND TOOLS
19UPCOMING OPPORTUNITIES
- National Homeownership Month June 2006
- Proclamation by President Bush
- Supported by HUD Workshops throughout
- the country
20HOMEOWNERSHIP MONTH
- Presidential Proclamation
From the earliest days of our Nation,
homeownership has embodied the core American
values of individual freedom, personal
responsibility and self-reliance. Homeownership
is also a bedrock of the American economy,
helping to increase jobs, boost demand for goods
and services, and build prosperity.
21HOMEOWNERSHIP MONTH
For 125 years, the title industry has protected
the American dream of homeownership. The land
records and title insurance system in the U.S.
allows people to secure loans on real estate to
build, be entrepreneurial, create jobs, and grow
our economy.
22HOMEOWNERSHIP MONTH
- Opportunities for Local Involvement
- Find out whats happening in your community.
- Initiate a proclamation by your local government.
- Sponsor a booth at a local fair.
- Give a presentation to a local civic group.
- Place an ad and/or article in your local
newspaper. - Participate in a Habitat for Humanity project.
23TITLE INDUSTRYMARKETING KIT
- Promote your business while forwarding our value
proposition - New addition Member Article Library
- (look for article on NHM in May)
24QUESTIONS AND ANSWERS