It's the absurd cost in Texas that is the real problem.

The lack of a free market for title insurance in Texas is the problem. The product is fine but the artificially high cost is unfair.

jja79 said:

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The lack of a free market for title insurance in Texas is the problem. The product is fine but the artificially high cost is unfair.

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I'm fairly certain I've read there are several states that do not have a free market either and are still much cheaper than Texas. There was an article I read some time before Covid breaking down title insurance in Texas and comparing it to other states. It also talked about the actual title insurance payouts. Quite informative.

Title insurance has around 90% profit margins. Other insurance products are about 40%. Ridiculous

We should open a title company Steve

None of the states we do business in have title insurance costs as high as Texas. I believe it's already been laid out why that is.

SteveBott said:

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Title insurance has around 90% profit margins. Other insurance products are about 40%. Ridiculous

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How do you figure that? Premiums vs. claims? Does this take overhead into account? I don't think it does.

This is somewhat dated info but applies. And yes I know the political position of the Observer

https://www.texasobserver.org/entitled-to-profit-in-texas-title-insurance-is-a-total-scam/


"In 2017, the latest year for which data is available, title companies sold $1.8 billion worth of policies, according to the Texas Department of Insurance (TDI). Of that, title companies retained $1.5 billion and paid $335 million over to their underwriters, the companies that actually compensate policyholders in the event of a claim. But according to TDI data, only about $24 million was needed to settle claims from title defects that year. In other words, for every dollar that the industry took in as revenue, they paid out little more than a penny to policyholders.
That isn't how insurance is supposed to work. Its economic purpose is to spread risk, distribute losses more evenly, and protect individuals from sudden shocks. Insurers rake in a big pile of money, but end up paying most of it out in the form of claims, only setting aside a percentage to cover the costs of doing business, and as profit.
Take property insurance, for instance. It is also relatively expensive in Texas, compared to other states, mostly on account of our violent weather. The loss ratio of companies like State Farm or Liberty Mutual ranges from 50 to 90 percent of their gross revenues. Of a $100 monthly premium, for example, $65 might get paid out to homeowners after fires or floods, in a typical year. The loss ratio on property insurance was 58 percent in 2018, according to TDI; for auto collision insurance, it was 57 percent"

Can one of the title insurance guys explain why Texans are saddled with ridiculous title iinsurance costs?

I'm riding off into the sunset at the end of next month and actually no longer live in Texas but it's something I can't believe all the consumer advocate groups haven't addressed.

So Texas title insurance rates are set by the Texas Department of Insurance. I am an independent title insurance agent so my office keeps 85% of the premium and the Underwriter gets 15%. These rates are scrutinized by TDI every few years to make adjustments to the rate. We will soon be receiving a rate decrease according to the state. They want to make sure we aren't profiting too much. It's true that our rates are higher than competitive rate states in most places, but its my opinion that we provide a better product and better service. Now the reason the agent gets 85% is that we have more personnel than most title companies in other states. Half of my staff does research for the title insurance product, unlike other insurance products that just sell insurance. The other half of my staff is closing personnel, people who gather all of the costs and collect all of the fees and put them together on the closing statements. I lost money in 2023 and just make enough to get people paid this year.

As I said, we provide a better product and better service because we can employ more people to accomplish this. You don't have to like it but I don't think you've proved it's a sham or over-inflated.

I would argue that customers in other states don't get the same service nor the same quality product.

You're suggesting Chicago, Stewart and other underwriters provide a superior title insurance product in Texas?

jja79 said:

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You're suggesting Chicago, Stewart and other underwriters provide a superior title insurance product in Texas?

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Yes, in the state of Texas I believe we provide a better product. That includes what Chicago can do in Texas vs. what they can do in New York.

GaryClare said:

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And it gets worse. I am almost certain you have to get new title insurance if you refinance your own property. The "old" policy doesn't carry to the new loan. Then the people who do the searches say they only go back as far as the last reputable company who researched it. But the old policy on your own property isn't good enough.

For the cost of this stuff I want to see the history from the first Spaniard who stepped foot on the property until the present.

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So the owners title policy you receive is good forever with a "good through" date as of the date of the policy. That means that even if you sell the house and twenty years down the line someone approaches you saying you didn't convey the property correctly (or whatever problem), your title policy still covers you.

A lender's title policy is good as to that Deed of Trust. That means if you refinance and get a new loan, the existing lenders title policy would not cover the new lender. They may require you to purchase a new loan title policy for the new loan. Also, there are refinance credits that you will receive for refinancing within 6 years.

LoneStarBQ said:

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GaryClare said:

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And it gets worse. I am almost certain you have to get new title insurance if you refinance your own property. The "old" policy doesn't carry to the new loan. Then the people who do the searches say they only go back as far as the last reputable company who researched it. But the old policy on your own property isn't good enough.

For the cost of this stuff I want to see the history from the first Spaniard who stepped foot on the property until the present.

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So the owners title policy you receive is good forever with a "good through" date as of the date of the policy. That means that even if you sell the house and twenty years down the line someone approaches you saying you didn't convey the property correctly (or whatever problem), your title policy still covers you.

A lender's title policy is good as to that Deed of Trust. That means if you refinance and get a new loan, the existing lenders title policy would not cover the new lender. They may require you to purchase a new loan title policy for the new loan. Also, there are refinance credits that you will receive for refinancing within 6 years.

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Thank you for the clarification!

Isn't the coverage the same?

Having been in this business a long time I called a contact with one of the big national underwriting companies who confirmed the title insurance coverage issued in states other than Texas is the same as is issued in Texas. The difference is it costs more in Texas.

jja79 said:

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Isn't the coverage the same?

Having been in this business a long time I called a contact with one of the big national underwriting companies who confirmed the title insurance coverage issued in states other than Texas is the same as is issued in Texas. The difference is it costs more in Texas.

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That is just not true (the part about insurance coverage being the same). Every other state uses policies and insurance forms created by ALTA (American Land Title Association) which is insurance trade association. Texas title insurers must issue title policies on forms promulgated by the Texas Department of Insurance - (not created by the trade association) and TDI acts at the direction of the legislature - among the most significant differences in a Texas policy and pretty much any ALTA policy is the coverage for "gap" period (i.e. time of closing vs time of actual recording - though e-recording is admittedly making this less of a risk in most Texas counties) and treatment of insurance of for mechanics lien claims for unpaid bills for work done - just to name a few, but there are other differences.

So with all due respect to your contact at a national underwriter, it doesn't sound like they know what they are talking about.

That is not to say that the Texas product is head and shoulders better than the product available in other states (and in fact with endorsements available in other states - at additional cost (conveniently never included in all the propaganda you see showing Texas rates being higher than other states) - the coverages between the ALTA policy and the TDI promulgated policies end up being pretty similar and cover nearly all the same risks, but it is inaccurate to say the policies are the same.

The other guy said the Texas product is superior. I'm curious in what way it's superior. When it comes to the consumer I can't find anyone who says they get better coverage in Texas.

Yesterday said:

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I don't understand why you have to buy title insurance when you pay the title company to make sure it's free and clear and the person selling it the actual owner.

Why doesn't the title company guarantee their work? Seems like a great business model. Charge someone for title research and then charge them again just in case they mess up.

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As a matter of law in Texas, any research done is solely for the benefit of the title company to determine whether they will bear the risk of insuring the transaction. There is no guarantee made of perfect title being transferred, just that they will indemnify the policy holder for a covered risk.