NY Dept. of Financial Services Issues Title Insurance Regs

The state’s Department of Financial Services issued final regulations Wednesday aimed at stopping “unscrupulous practices” in the title insurance industry.

One of the finalized regulations clarifies the rules around marketing expenses, including meals, entertainment and ancillary fees that title agents or title insurers may charge a customer at closing. Another regulation finalized by the state agency requires title insurance companies and agents that generate a portion of their business from affiliations to function separately and independently from any other affiliates. Title insurance companies and agents must be able to accept business from other sources as well.

The regulations were born from a 2015 investigation by the department, which found that title insurance companies, real estate agents and others who order title insurance on behalf of clients spent millions of dollars on incentives to attorneys and real estate agents that officials charged to consumers as marketing costs, the DFS said in a press release. The incentives are a violation of the state’s anti-inducement provision of the state’s insurance law.