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Tuesday, October 17, 2006

Insurance Commission Omission

posted by on October 17 at 17:28 PM

The PI article about title insurance companies illegally spending thousands of dollars to woo clients may be the most boring scandal ever exposed, but this afternoon it got slightly more interesting.

11 insurance companies are named in the State Insurance Commissioner’s report, all of which went over (um, really really over) the state’s $25 cap on “prizes, goods, wares or merchandise” given to realty companies with whom they want to get buddy-buddy.

But a tipster who used to work as an internal auditor for Fidelity Insurance (one of the companies named) called in today to tell us that the PI article left out a crucial point: while 11 companies are named, several of them are actually the same few corporations.

The PI’s list of the offending companies looks like this: Chicago Title Insurance, Commonwealth Land Title Insurance, Commonwealth Land Title of Puget Sound, Transnation Title Insurance, Fidelity National Insurance, First American Title Insurance, Old Republic Title, Pacific Northwest Title, Rainier Title, Stewart Title of Seattle, Ticor Title of Washington.

It really looks like this: Fidelity (owner of Fidelity, Ticor and Chicago Title), LandAmerica (owner of Rainier, Transnation and both Commonwealths), First American (owner of First American and Pacific Northwest), Stewart and Old Republic.

Why is this important? Because it means there’s really 5 violating companies, not 11. And because the reason State Insurance Comissioner Mike Kreidler gave for not prosecuting any of the companies despite the giant damning investigation is “because the problems were so widespread” and also that prosecution wasn’t completely necessary because “he expected companies obeying the law to start turning in competitors who weren’t.”

Doesn’t it drastically undermine Kreidler’s already shaky logic if the “widepsread” problem is the violation of 5 companies, not 11? And the field is only half as competitive as it’s portrayed to be?

File under boring but important, please.

RSS icon Comments

1

Bravo!
Good reporting.

Posted by David Sucher | October 17, 2006 6:30 PM
2

That was GREAT reporting. Where are your snarky detractors now Sarah?

Posted by loves me some smirk | October 17, 2006 6:56 PM
3

It's much more complicated than that, actually. While they are affiliated, they are all separate corporations with some overlap in ownership. Kriedler would have to go after each one, unless he could "pierce the corporate veil," which is difficult to do.

The other side of the coin was not reported. It is against the law for the realty types to take referrals or kickbacks of this nature, and they all know it. It is also a serious violation of Federal law (see Real Estate Settlement Procedures Act, 12 USC Sec. 2607, in particular, on which I bet Washington's law is based).

The costs to consumers are real. The problem is systemic. Just another reason why real estate agents are making themselves increasingly obsolete.

Posted by SB | October 17, 2006 8:31 PM
4

Piss off SB. Insurance companies are slime. They make their money by not paying valid claims, not because they take in premiums.

This is some excellent reporting/slogging. The ethic at insurance companies is screwed up.

And as far as Sarah Mirk’s second rhetorical question goes, HELL YES it matters.

Posted by Gribble | October 17, 2006 9:02 PM
5

It's much more complicated than that, actually. While they are affiliated, they are all separate corporations with some overlap in ownership. Kriedler would have to go after each one, unless he could "pierce the corporate veil," which is difficult to

Posted by Boobler | October 18, 2006 12:45 AM
6

Dear Gribble: You're an ass and probably a realty type. My post was not about how upstanding insurance companies are. They aren't, and I'm certainly pissed that my insurance premiums are costly because of this B.S. However, insurance companies would have no temptation if those on the other end weren't also participating, which is also a serious violation of Federal law. And realty types know this, because they have to learn about the anti-kickback and -referral provisions before they get licensed.

Posted by SB | October 18, 2006 9:20 AM
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Excellent!

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Posted by Spooler_Go_97 | October 24, 2006 3:00 AM
17

Kickbacks, sham operations, referral fees, gifts and give aways are problems all over the country. It's spread like an unchecked cancer through the real estate industry. Honest, law abiding, fairly priced real estate agents, mortgage lenders, and title insurers have been begging regulators to take action for years. Finally-we have the attention of the country. You are right to point out the there are two parties to each violation. Someone has to give and someone has to receive. They are both violating the law. Consumers have the power to protect themselves and help us fix the problem. Please shop for services. Compare pricing and services. Please do not rely on professionals to make a referral. Honest players will always give a full quote in writing. Ask for it and make your own choice.

Posted by Diane Cipa, General Manager, The Closing Specialists® | October 26, 2006 2:12 PM
18

The five companies you mention - Fidelity, Land America, First American, Stewart and Old Republic underwrite 92% of all the title insurance in the US... they are like a cartel. For more information on these title insurance companies and how I believe they should change please check: http://transparentre.com/2006/10/29/an-open-letter-to-the-title-insurance-industry.aspx

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