For Frank Willey, the appeal of a career in the title insurance industry is being a linchpin in a process that helps families settle into their own homes and businesses to flourish.
"This is such a dynamic business to be in. The real estate industry touches so many people daily throughout our country," said Willey, president of the American Land Title Association and vice chairman of Fidelity National Financial Inc. in Santa Barbara, CA. "It’s exciting to be part of the process of the purchase and sale of homes, the refinancing of mortgages and the development of commercial enterprises."
But title insurers shouldn’t limit themselves to thinking they’re merely the provider of title or escrow services, Willey maintains. Instead, they should position themselves as the overall facilitator of the real estate transaction.
"We need to insert ourselves in the process as a transaction manager to assure that it goes expeditiously, that it goes smoothly, that it goes correctly. We must become the entity providing the products and services, on behalf of realtors or mortgage lenders, necessary to achieve those ends," Willey said. "We have the expertise and the familiarity with the real estate process to do that. That’s why I see us as a transaction manager doing so many things in addition to providing title and escrow services."
Willey speaks from experience when he outlines his view of the industry’s role in the real estate process. He started his title insurance career with a tiny company that has grown into the nation’s largest title insurance underwriter and provider of real estate services.
Vision for the Future
Willey’s first exposure to the title insurance business came in the late 1970s, when he was an attorney with the Phoenix, AZ, law firm of Foley, Clark and Nye. One of the firm’s clients was a savings and loan operation with a two-office title insurance underwriter known as Fidelity National Title Insurance Co. Willey took care of the insurer’s legal affairs.
When the law firm’s senior partner, William P. Foley II, acquired Fidelity National in a 1984 leveraged buyout, Willey signed on as vice president and general counsel. What persuaded him to join Fidelity was Foley’s vision for the title insurance industry.
At the time, Foley saw the industry as fragmented companies that did business the old-fashioned way, offering limited products and services and letting customers come to them. Foley’s view was that title insurance, unlike other forms of insurance, should be more sales and marketing oriented.
"Bill really set the standard for the way the business is promoted today," Willey said. "I was really a disciple of Bill’s. He was a very successful lawyer and businessman. I was very attracted to his entrepreneurial spirit and sense of vision."
Fidelity expanded over the years under Foley’s direction, adding title insurance underwriters and real estate-related enterprises to its portfolio. Willey served in various capacities with the company’s subsidiaries and affiliates before being named president in 1995.
A 2000 merger with Chicago Title Corp., a company 50% larger than Fidelity, made Fidelity the nation’s largest provider of title, escrow and real estate-related products and services with over 1,000 offices and 7,000 agents. The same year, Willey became Fidelity’s vice chairman and division manager for agency operations.
The merger combined Fidelity, a West Coast-based entity with roots in residential real estate, with Chicago Title, a Midwest-and East Coast-based company with a significant presence in the commercial sector, to form an organization with geographical, product and service, and customer diversity.
The challenges of assimilating a larger company into Fidelity’s operations were significant, Willey said, but after 18 months, results have exceeded goals. Fidelity had total 2000 revenues of $2.7 billion, nearly twice 1999 revenues. "Notwithstanding the fact there have been thousands upon thousands of man-hours invested in its success, the endeavor has proven to be both financially and operationally successful," he said.
One decision made early on was to maintain each of the merged company’s five title insurance companies, Fidelity National Title, Chicago Title, Ticor Title, Security Union Title and Alamo Title, as separate brands. The thinking behind the decision was to encourage employees who contribute to the company’s revenue base, many of whom might otherwise have jumped ship because of the merger, to stay with Fidelity.
"Our largest challenge was to maintain the revenue base of the Chicago Title family of companies. We felt the best way to do that was to maintain the cultural identity and integrity of the Chicago Title brands," Willey said. "Each of these entities had its own base of customers that chose to do business with it for their own reasons. We felt that if we came in and disturbed the underlying reasons why customers chose those brands, we would lose revenue."
Once the revenue base was solidified, the focus moved to increasing productivity. "Fidelity historically has been the productivity leader in the title insurance industry in terms of opening and closings per employees," Willey said. "We felt that if we could maintain the revenue base of the Chicago family of companies and inject Fidelity’s productivity-leading discipline into its operations, the overall profitability of the combined entities would be much greater than either on a stand-alone basis."
Productivity improvement measures included centralizing functions such as accounting, human resources, legal operations, bulk purchasing, and real estate leasing, freeing up operations managers to focus on serving cust-omers and expanding market share.
Fidelity’s merger experience offers useful lessons for other companies undergoing or contemplating mergers. "Often with mergers you add one and one together and end up getting something less than two, typically as a result of losing revenue-attached personnel," Willey said. "I think our success in being able to have one and one equal two-and-a-half is evidence that it is critical to maintain the individual integrity of the respective organizations. The integrity and brand name of a company are very valuable assets that need to be protected."
Ongoing communication is vital, he added. "You can’t communicate enough what you’re doing and, more importantly, why you’re doing it," he said. "Integration through communication was the key to our success, versus integration through dictatorial edicts of ‘Here’s what we’re going to do.’"
Also important is a collaborative approach. "The Chicago companies were certainly the gold standard in terms of underwriting and customer relationships, so it wasn’t a situation of needing to teach them something about the title insurance business," Willey said. "It was really integration through a best-practices approach. Any change we implemented was thoroughly communicated and had a rational basis, not simply ‘We do it this way, so you’re going to do it this way.’"
Throughout his career as an attorney and executive, Willey has recognized the importance of being active in professional organizations and trade associations such as ALTA®. He served on the ALTA® board of governors and chaired the Title Insurance Underwriters Section before moving up to president-elect and, now, president.
"The association is critical to the success of the industry because it allows us to be heard," he said. "Through ALTA®, we are strategically positioned in Washington and can work hand-in-hand with other associations, like the Mortgage Bankers Association. ALTA® is also a great repository for information on what’s going on in the industry at both the national and state levels. ALTA® is able to stay on top of key legislative issues and developments, and give guidance at the state level."
Member involvement is essential, he added. "Everyone is busy, but it is important for ALTA® members to become involved and make a commitment of time. The success of ALTA®, like any trade association, depends on the efforts of its members. The more involved the membership becomes, the more empowered its leadership is and collectively more gets done."
Members can contribute, Willey said, by joining ALTA® committees and speaking out on industry issues at the local, state and national levels. "It’s very important for members to let their government representatives know their positions," he said. "They got there through the vote of the people and they can be removed just as easily through the vote of the people."
Among the most important issues ALTA® will address during the coming year is legislative reform of the Real Estate Settlement Procedures and Truth in Lending Acts. ALTA®’s challenge, Willey said, is to make certain the industry’s point of view is heard and to prevent RESPA/TILA changes that would limit consumer choice of real estate settlement services and lower the quality of service.
Trends to Watch
The consolidation trend in the title insurance industry is not over, Willey said, although additional underwriter mergers may not occur any time soon. He believes underwriters will continue to acquire agents, particularly those who wish to liquefy their investment in their business or want to join a larger organization for competitive reasons.
Willey predicts a proliferation of controlled business relationships between banks and insurers, although a number of issues still need to be worked out. Historically, many controlled business arrangements involved referral fees, which are prohibited by RESPA. "Both underwriters and lenders are feeling their way on what a controlled business arrangement would look like structurally to be RESPA-compliant," he said. "Once that is resolved, I think both parties can benefit by some type of revenue-sharing model."
Technology will continue to be a driving force for change in the industry, Willey said. As customers demand more from the industry, including products and services that are better, cheaper and faster, integrating distribution systems and automating transactions will become a priority.
"It is important to be able to take costs out of your back room to meet price demands, because if you don’t, someone else will," he said. "The most efficient companies will be able to supply products and services at a profit. And the only way to become more efficient is through technology."
Hand-in-hand with consolidation and technology trends is the movement toward title insurance companies offering a diversity of services. Under a concept known commonly as one-stop-shopping, cross-selling and bundling, many insurers like Fidelity are going beyond traditional title insurance and escrow services to provide tax, flood, credit, appraisal and other services related to real estate.
As mortgage industry consolidations continue, the resulting larger companies will want to work with fewer vendors, Willey believes, and insurance companies with an eye on the future will take advantage of the opportunity to expand their services and offer customers one-stop-shopping on real estate transactions.
"The industry has been tagged with an attitude of being opposed to bundling, but our concern is making sure that the value-added proposition of services are maintained in terms of consumer choice and quality of products and services provided. That’s ALTA®’s and the industry’s position on it," he said.
The most successful companies, Willey predicts, will evolve into business partners with their customers and will focus on using technology to make processes less expensive and more efficient. Integrating insurers’ distribution and production systems with their customers, for example, could allow customers to originate mortgages less expensively than they do today.
"Those are the kinds of advantages customers want to see," he said. "The companies that best serve those needs will be the companies with the largest market share."
It all goes back to Willey’s view of today’s title insurers becoming tomorrow’s real estate transaction managers. "We can do so many things in addition to providing title and escrow services. We can be the overall facilitator of the real estate transaction itself. I think it’s a very positive thing for the industry."
Ellen Schweppe, APR, is president of Ellen Schweppe Company, LLC, a public relations firm serving the financial services and other industries. She can be reached at firstname.lastname@example.org or (703) 435-5621.