Title Insurance Premiums Decline at Lower Rate than Previous Year
May 18, 2010
The American Land Title Association (ALTA) reported title insurance premiums written during 2009 nearly held steady from 2008 after dropping significantly the past five years.
According to results from the ALTA’s 2009 Market Share Analysis, the industry reported a 4.5 percent decrease in title insurance premiums, falling to $9.6 billion from $10.0 billion in 2008. Title insurance premiums have fallen steadily since the height of the housing boom in 2005, when premiums reached their pinnacle of $16.9 billion.
“The temporary tax incentives and Federal Reserve’s efforts to keep mortgage interest rates low helped bring more consumers into the housing market and modestly rejuvenated a dilapidated housing market. While significant foreclosure activity remains a drag on overall housing prices, the incentives have benefited the title industry to some extent in 2009,” said Kurt Pfotenhauer, chief executive officer of ALTA. “The mortgage market was dominated by refinance activity in 2009 as the federal government rolled out several programs for homeowners to restructure their loans. While refinances accounted for nearly 65 percent of all originations last year, the refinance market is expected to retract significantly in 2010 while the purchase market is predicted to remain flat.”
Overall, 25 states experienced increases in year-to-year title insurance premiums. California once again generated the most premiums and boasted an 8.4 percent spike as premiums increased from $1.4 billion in 2008 to $1.5 billion last year. The next three largest markets – Texas ($1.0 billion, down 17.6 percent), Florida ($700 million, down 23.8 percent) and New York ($585 million, down 22.7 percent) – all experienced declines in premiums. However, Pennsylvania reported a 9.7 percent increase as premiums improved from $407 million in 2008 to $446 million last year to round out the top five markets.
Alaska experienced the largest increase as premiums increased 26.3 percent year-to-year, improving to $38 million. Other states reporting the largest increases include Wisconsin ($120 million, up 17.6 percent), Montana ($52 million, up 15 percent), Oregon ($189 million, up 14.8 percent) and Hawaii ($65 million, up 14.4 percent).
“As indicated by these results, the profitability of the title insurance industry always has been and always will be contingent on the cyclical nature of the mortgage market,” Pfotenhauer said. “The scattered improvements illustrate real estate is an extremely local business. Each market performs differently depending on local economic conditions.”
Click here to view the complete 2009 Market Share Analysis.
Contact ALTA at 202-296-3671 or email@example.com.