Although in the past, technology had played a minor role in some of the changes, the arrival of the Internet by way of the "dot.com" revolution shook our industry and in many instances placed us in a state of flux. At question is the very foundation of how business is conducted—who is best positioned to provide the products and services our segment of the industry has traditionally been responsible for delivering?
As our industry moves further into the 21st Century, the relationship between title underwriters and title agents will very likely provide tremendous opportunities. There is little doubt the products and services we provide today will continue to undergo a metamorphic process. New and different kinds of products and/or services may replace traditional ones completely. Unfortunately, some potential pitfalls that are fueled by the competitive differences between title underwriters and title agents, also loom in the periphery. These competitive differences could open the door to other entities encroaching into the title and settlement services arena if we do not align our collective resources and respective positions even further.
United We Stand.... Divided We Fall
It's indisputable that underwriters and agents are dependent upon one another. Agents need the underwriting services and support that title insurers provide. Underwriters need agents in order to grow national referral and distribution networks. Ironically, it is also true that underwriters and agents are vying for the same customers in many geographic locations.
In some camps, there is a perception that underwriters acquire independent agents in order to eliminate this competition. I don't believe the elimination of competition is the primary driver of underwriter acquisitions. In an acquisition, the underwriters benefit only if they are confident they can secure and maintain an agent's employee and customer base. The reality is more likely that both the underwriter and agent are making sound and prudent business decisions. Agency owners decide to sell their operations to maximize their investment or become part of a larger structure. To expand their business universe and preserve or expand their market share, underwriters acquire experienced and viable companies. It's simply a good business decision for both parties. While title agents and title underwriters have evolved differently, they share far more practical business conventions than differences. Agents and underwriters are continually working together in setting policy terms, auditing services to ensure compliance with underwriting and escrow standards, and prevention of potential claims and most importantly, providing service to their customers. Like any strategic business partnership, certain players bring certain advantages to the table. It all goes to the core of why companies seek business partners — "Why should I get into business with somebody if I don't have anything to gain?" The good news is that everyone does have something to gain. Underwriters and agents have evolved into a symbiotic existence, the question is not "why should I work with them" but rather "how can I succeed with them today?"
For the agents, underwriters produce economies of scale at many levels. They can pass on referrals for bulk pricing in purchasing capability, technology initiatives, and packages or bundled solutions. These market advantages enable agents to service large customers and handle national business that they may not have otherwise been able to satisfy. Agents also benefit greatly from the underwriting counsel they receive.
For the underwriter, a geographic area where an agent has developed significant relationships with customers, the partnership is highly valuable in terms of underwriting premiums. These agents contribute the knowledge, the experience, and the customer relationships. Another source of misunderstanding revolves around the commercial arena. Agents who have developed a strong presence in the commercial marketplace believe there is a gap in underwriter referrals. Cross referrals seem to be a good starting point for discussion, but again it comes down to good sound business strategies—both sides have to evaluate what is good for their own business and their customers.
My perspective is that right now there exists an opportunity for total unification between title underwriters and title agents, industrywide. That's a pretty tall statement, however, the bottom line for both groups is actual business they might not have otherwise captured, and continued longevity in our industry.
|ALTA® Participates in Standards Group: Fannie/Freddie Make Announcement|
As title and settlement service agents play such a large part in the closing transaction, it seems that as an industry, we should be well informed and actively working together with other groups such as the Mortgage Bankers Association (MBA), the National Association of Realtors (NAR), the National Notary Association (NNA), and the National Association of County Recorders (NACRC), to establish standards and workflow that would ensure that our voices are heard and our interests are protected. (See the sidebar on ALTA®'s involvement in one of these groups on page 24.)
In today's business world, competition is fierce. Companies are continually looking for ways in which to expand their markets, grow their revenue and keep profits healthy. All companies desire to be successful. In order to do so they must be profitable. As technology and eBusiness come into play, and new tools and processes become available, the playing field becomes level for all participants (small mom and pop shops, medium and large entities) to compete because they have access to a complete platform of products and services that they can distribute locally, regionally, or nationally, regardless of their size.
The mantra of the "00" decade is better, cheaper, faster. Technology certainly plays a big part in helping achieve this end. But, at the end of the day, it's the business relationships and partnerships and the service provided to customers that sustain the health and longevity of companies and industries.
Deborah DeMaddalena was most recently executive vice president for Micro General, the leading provider of production and workflow software for the title and real estate industries. For more information about Micro General, contact Pat Dwight at firstname.lastname@example.org or 949-622-3927. Micro General's Web address is: www.microgeneral.com.