California title insurance anti-kickback bill passes committee

May 1, 2005

Bill targeting illegal referral fees clears first hurdle

Inman News

A California bill targeting illegal rebates in title insurance has passed committee, clearing its first legislative hurdle, the state's insurance commissioner reported Thursday.

California Senate Bill 728, introduced by Senator Martha Escutia, D-Montebello, would enable the insurance commissioner to discipline individuals transacting title insurance who use illegal rebates to get title business.

California Insurance Commissioner John Garamendi, who sponsored the bill, announced the news Thursday. Garamendi is currently investigating the title industry for illegal kickbacks paid to captive reinsurance companies controlled by developers, lenders, builders and real estate firms.

The bill would prohibit a person from marketing, offering, or selling title insurance in California unless that person holds a valid certificate of registration as a title solicitor issued by the commissioner. Violation of the prohibition would be a misdemeanor.

The bill specifies that the insurance commissioner may bring an action against the business by which an applicant is employed for any violation of certain anti-rebate statutes in the state's Insurance Code.

"This bill targets a pervasive practice in the title insurance industry that often results in inflated title insurance premiums for California's homeowners," Garamendi's office said in a statement. "It addresses the problem of the use of illegal rebate activities to procure title insurance business."

Earlier this month, Garamendi hit Stewart Title of California with $750,000 in fines and costs for alleged illegal kickbacks to real estate agents.

Copyright 2005 Inman News

Contact ALTA at 202-296-3671 or