State orders cease-and-desist against three title insurers
|March 7, 2005|
Colorado names LandAmerica subsidiaries
The Colorado Division of Insurance on Friday issued a cease-and-desist order against three title insurance companies whose parent company, LandAmerica, is being targeted by an investigation for alleged illegal kickbacks.
The companies named in the order were Commonwealth Land Title Insurance, Lawyers Title Insurance and Transnation Title Insurance, according to a copy of the order.
The order blocks the companies from engaging in certain business arrangements with captive reinsurance companies by which the companies allegedly split fees with home builders that were directing volumes of business to them. Such practices, known as kickbacks, are in violation of the Real Estate Settlement and Procedures Act, as well as Colorado statutes.
Colorado's investigation of such schemes has prompted other states, including California, Florida and Minnesota, to look into possible illegal practices.
The Colorado Division of Insurance and other state insurance departments have said the alleged kickback schemes inflate rates on title insurance.
LandAmerica in a previous statement to the press said it is "extremely concerned," and believes statements regarding alleged improper conduct are "untrue and misleading." The company voluntarily ended its reinsurance arrangements in Colorado and said it is in the process of ending them nationwide.
The company said its captive reinsurance arrangements have not resulted in any injury to consumers.
A second large title insurer named in Colorado's initial investigation, First American Title Insurance, agreed to refund about $24 million to consumers nationwide while under investigation. The company admitted no wrongdoing.
Fidelity National Financial, also named in the Colorado and California probes, voluntarily shut down its captive reinsurance operations nationwide. The company has been cooperating with investigators and said it will continue to do so.
Copyright 2005 Inman News