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ALTA® Survey Reveals Value of Title Insurance

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January/February 2001 - Volume 80, Number 2

by Mark A. Bilbrey and Richard W. McCarthy

For the 4th consecutive year, ALTA® surveyed its member abstracters and title agents to determine operating statistics and other characteristics of the group. The resulting report, "ALTA® Abstracter and Title Agent Operations Survey 2000" is helpful in gauging operating results, in comparing one company with another, and in tracking changes in the industry. This article provides a summary of some of the survey results on types of business activities, gross revenue, operating expense, and other operating statistics. These characteristics are comparable with similar information reported from surveys in 1997, 1998, and 1999. A comparison of employee benefits is useful in assessing each company's current competitiveness for staff. Some of the benefits information was also reported in previous surveys and provides a reliable overview of employee benefits in companies of various sizes.

Several new topics are introduced in this current survey. The percent of orders that require curative actions and the most common defects that require curative action are reported for the first time. The size of each company's market, and each company's market share, is reported in more detail.

How Responses Are Reported
Revenue is the most important demographic characteristic associated with all companies. All survey responses are reported by four categories of annual revenue. The percent of respondents in each revenue category in the current survey (based on gross revenue in 1999) and in the 1999 survey (based on gross revenue in 1998) is:

Revenue 1999 2000
Less than $500, 000 51% 58%
$500,000-$999,999 21% 14%
$1 million-$3 million 18% 18%
More than $3 million 7% 10%
Not reported 3%

Several participants did not report revenue in 2000; those companies were assigned to a revenue category based on other reported attributes. The 1999 survey covered base pay and other compensation of selected officers and staff. This topic may have generated higher-than-normal interest among companies with $500,000 to $999,999 revenue. Companies this size surged to 21 percent of the sample in 1999 but decreased to 14 percent of the current sample, similar to their representation in the 1998 and 1997 surveys. Companies with $1 million or more revenue have accounted for approximately one-fourth of responses in each of the four surveys. Survey results are also reported by five categories based on number of orders received. In each category, the percent of companies in the current survey (based on orders received in 1999) and in the 1999 survey (based on orders received in 1998) is:

Orders Received 1999 2000
Fewer than 500 11% 18%
500-1,099 20% 24%
1,100-2,499 13% 12%
2,500-4,999 13% 12%
5,000 or more 11% 11%
Not reported 21% 16%

The shift in the current sample to relatively smaller companies (those reporting fewer than 500 orders) mirrors the shift among revenue categories from the 1999 survey to the 2000 survey. However, companies reporting 2,500 or more orders are almost one-fourth of the sample in both years. Measured by average number of full-time employees, companies participating in the 2000 survey are approximately the same size as companies participating in 1999. Among all participants, an average of 12 full-time employees was reported in both years. Median number of full-time employees decreased to 5 in 2000 from 6 in 1999, reflecting an increase in the number of companies with 3-5 full-time employees in the 200 sample. The percent of respondents in each staff size category is:

Full-time Employees 1999 2000
1-2 18% 20%
3-5 23% 33%
6-10 26% 17%
11-25 21% 19%
More than 25 9% 10%
Not reported 3% 2%

Full-time employees range from an average of 4 in companies with revenue less than $500,000 to an average of 49 in companies reporting revenue greater than $3 million. Median number of full-time employees varies from 3 in the smaller company category to 34 in the larger company category. Other respondent characteristics, including percent of revenue generated from typical activities, operating expenses and payroll, population of the countries in which the company conducts business, transactions recorded daily in these countries, percent of the company's business that is residential, and the way the company is organized for accounting and tax purposes, are continued in the survey.

Characteristics of Surveyed Companies
Title insurance, with 360 of 420 surveyed companies reporting, accounts for almost two thirds of revenue. Title insurance accounts for approximately 65 percent of revenue among all sizes of companies. Escrow and closing functions account, on average, for 20 percent of revenue among the 309 companies reporting. Companies with revenue of $1 million or more reported that escrow and closing functions account for 23 percent of their revenue.

Only 243 of 420 companies reported that abstracts account for any portion of their revenue. Among these 243 companies, abstracts accounted for an average of 39 percent of revenue in 1999. Smaller companies derived a larger proportion of their revenue from abstracts. Among 165 companies with less than $500,000 revenue, abstracts accounted for an average of 46 percent of revenue. Among 23 companies with more than $3 million revenue, abstracts accounted for an average of 24 percent of revenue.

Among the 420 surveyed companies, only 33 reported any revenue from law practice. Twenty-two of the 33 indicated their company's 1999 revenue was less than $1 million and that a law practice accounted for an average of 34 percent of gross revenue. The geographic distribution of respondents in 2000 and 1999 is displayed in the chart below.

Region 1999 2000
New England (ME, NH, VT, MA, RI, CT) 1% 2%
Mid-Atlantic (NY, NJ, PA) 5% 7%
South Atlantic (DE, MD, DC, VA, WV, NC, SC, GA, FL) 4% 6%
East South Central (KY, TN, AL, MS) 2% 2%
East North Central (OH, IN, IL, MI, WI) 23% 20%
West North Central(MN, IA, MO, ND, SD, NE, KS) 33% 33%
Mountain (MT, WY, CO, NM, AZ, UT, NV) 12% 13%
West South Central (AR, LA, OK, TX) 11% 11%
Pacific (WA, OR, CA, AK, HI) 6% 5%

Within each category of orders received the median number of full-time employees is:

Orders Received Full-time Staff
Fewer than 500 orders 2
500-1099 4
1,100-2,499 7
2,500-4,999 16
5,000 or more 28

Respondents rely on part-time as well as full-time staff, with 247 companies reporting an average of 2 part-time employees. Among smaller companies that employ part-time staff, there is an average of 2 full time employees for each part-time employee. Among larger companies that employ part-time staff, the ration is 9.8 full-time employees for each part-time employee.

Curative Action Taken
It has always been said that the value of the title insurance product is more than just claims paid, it is also the claims prevented by requiring curative actions prior to closing the transaction. This year the committee asked the survey respondents to indicate "excluding current real estate taxes and known existing liens what percentage of orders require curative actions prior to closing or policy issuance."

The results indicate that approximately one-fourth of orders require curative actions prior to closing or issue of a title insurance policy. Among respondents an average of 19% of regimental re-sales they handle require curative actions, the highest percentage among the several types of transactions listed. For each type of transaction, the average percent of transactions that require curative action is:

Transaction Curative Action
Regimental resales 19%
New Sales 13%
Refinancing 17%
Agricultural sales 14%
All types combined 24%

Ownership issues are the most common defect that requires curative action, in the estimation of 37 percent of those responding. Another 15 percent consider liens and judgments the most common defect. Another 11 percent consider legal errors and descriptions the most common defect and 7 percent consider access issues the most common defect. Examples of each type of defect, in the words of respondents, are: Ownership issues, deceased seller; marital status; quiet title; undischarged mortgage; proof of hiership; unreleased deed of trust; affidavits needed to clear title; unrecorded releases; termination of joint tenancy; Liens/judgments, unreleased loans; county liens; prior lien; circuit judgment; mechanics liens; pay off loans; uncancelled liens; clearing judgments; old liens. Legal errors, mis-executed documents; bad legal description; incorrect legal description; improper legal description; bad legal or overlaps; typos; discrepancy of names; errors on prior deed; Access issues, permits; mineral owner cloud; easements; survey/description; easement violations; state subdivision permit issues; access to and from land; encroachments. Respondents were first asked to name the three most common defects that require curative actions and secondly, to estimate the percent of total defects each of the three most common defects represented. The most common defects are those listed above, listed in order of number of times mentioned. Among all types of defects named as "most common," respondents estimate their most common defect accounts for 51 percent of all defects. The average percent of total defects accounted for by each specific type of defect named the "most common" is:

Type of Defect Percent of Total
Ownership issues 49%
Liens/judgments 61%
Legal errors/descriptions 41%
Access issue 51%

Finally survey participants were asked: What percent of the total title insurance marked served by this company has been taken by new entrants not in the title business in the last year? In the last five years? Four types of organization were listed as potential new entrants: banks builders, Realtors©, and title insurers. "Title insurers" was mentioned most frequently, with 128 companies estimating that title insurers had taken an average of 10 percent of their market in the last year and 145 companies estimating that title insurers had taken an average of 14 percent of their market in the last five years.

Banks were next most frequently mentioned: 94 companies estimated that banks entering their market in the last year had taken an average of 14 percent of the market; 78 companies estimated that banks entering their market in the last five years had taken an average of 14 percent of the market. All abstracter and title agent members of ALTA® were invited to participate in these surveys. The large sample that results from these efforts—approximately 25 percent of all members—makes the results a credible and reliable snapshot of the abstracter and title agent characteristics. Participants receive a complimentary copy of the results. To find out how you can participate in next year's survey, contact Richard McCarthy at the address below.

Mark Bilbrey is president of Warranty Title and Abstract, Inc., in El Reno, OK, a member of the ALTA® Board of Governors and chair of the ALTA® Finance Committee. He can be reached at or 405-262-3093. Richard McCarthy is director of research for ALTA®. He can be reached at or 1-800-787-ALTA. To order additional copies of the survey, call ALTA® at the 800 number or visit the ALTA® Store on the Web site at

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