Two title insurance companies ordered to pay over $240,000 in penalties
|January 3, 2008|
JEFFERSON CITY, MO - The department announced that it is ordering two title insurance companies to pay over $240,000 in fines and to fix current title agency rating procedures.
Market conduct examinations completed by the department indicate Land Title Insurance Company of St. Louis and First American Title Insurance Company, of California, allowed independent title agencies writing title insurance on their behalf to use incorrect risk rates or risk rates not filed with the department. Risk rates are used in calculating the premium a consumer will pay for the cost of title insurance.
“The new title insurance reforms I signed provide for better disclosure to consumers and more accountability to companies and agencies to ensure they give Missourians consistent and fair prices for title insurance,” Gov. Matt Blunt said.
“The results of these examinations demonstrate the importance of new laws Gov. Matt Blunt signed last year,” Director Ommen said. “Missouri consumers deserve to be treated fairly and honestly during the home-buying process. Title agencies should not use varying rates or rates not filed with this department, and title companies should do a better job of overseeing the transactions of agencies that work on their behalf.”
Gov. Matt Blunt signed extensive title insurance reform legislation that becomes effective with the new year. Senate Bill 66 clarifies a duty to fully disclose to consumers separate price information for insurance premium and for the title search and other services, and it requires title insurance companies to actively oversee title agencies writing business on their behalf by conducting annual audits of escrow, underwriting and claims practices.
In the fall of 2006, the department began a series of on-site investigations of title insurance agencies in an effort to review the marketplace and see how the title industry was marketing, underwriting and rating insurance coverage in the St. Louis area. Statements of Charges were filed against 16 tile insurance agencies alleging that all agencies misrepresented, concealed or suppressed information from consumers regarding the actual cost of a title insurance policy and the charges or fees for services related to the examination of title records, but these findings proved to hold true throughout most of the market.
The new laws also prohibit the misuse or commingling of real estate closing or settlement funds, prohibit receiving or paying kickbacks for referring business and require full disclosure of affiliated business arrangements, clarify standards for licensing and require continuing education for title agency employees and clarify the department’s authority to issue cease and desist orders, injunctions, consumer relief, civil penalties and recovery of investigative costs for violations.
Source: Missouri Department of Insurance, Financial Institutions & Professional Registration