Changes in Title Insurance

Jason Gordon is president of AmTrust Title and has more than 15 years of experience in the industry.

A robust economy and an employment rate nearing historic levels have driven the real estate market to astronomical heights. With the residential sales market upward of $100 million and single commercial transactions over $2 billion being more common in recent years the world of title insurance has changed. This begs the question as to the need to spread risk. Until recently, almost 90% of that risk has been underwritten by four companies.

Beyond the Big Four

Recently, one of the “big four” title insurers announced plans to purchase one of their competitors – essentially leaving three companies to assume billions of dollars of risk annually. As Fidelity completes its acquisition of Stewart Title the lack of competition in this growing multibillion dollar industry seems increasingly impractical and speaks to an industry that is in need of expansion. Another key concern is the ability to accommodate a client’s needs no matter the deal size.

The merger will take the five companies within the same “family” and create two big players and one steady company as industry giants. As the industry shrinks there is a risk of one of the three title companies reaching or exceeding their capacity. As a result of the deals being monetarily larger, clients are looking to reinsurance as an option to spread the risk across different balance sheets. The lack of title options creates opportunity for new underwriters.  Instead of spreading the risk amongst other non-related companies the giants re-insure through their “family” structures keeping the balance sheets spread amongst their own wholly-owned companies.