Nearly 30% of Title Insurers' Losses and
Claims Expenses Arise
from Issues Not Found in a Public Records Search
WASHINGTON, May 20, 2024 /PRNewswire/ -- Fraud
and forgery claims represent 21% of the total dollars spent by
title insurers on claims expense and losses, with an average claim
cost of over $143,000, according to a
new independent analysis conducted by Milliman, a premier
global consulting and actuarial firm. Including fraud
and forgery, the analysis found nearly 30% of title insurers'
losses and claims expenses arose from title problems not
discoverable from a public records search.
The study examined over 127,000 claims associated with policies
issued between 2013 and 2022, identifying key sources of title
insurance claim costs throughout the decade.
"The evidence is clear: expert title professionals do so much
more than just scan public records or push a button to secure
property rights," said Diane Tomb,
ALTA's chief executive officer. "With the cost of
fraud and forgery claims averaging more than twice the
national average salary in the U.S., the risk of not purchasing a
title insurance policy is far too high. This analysis highlights
the significant risk exposure presented by any waiver of title
insurance policies on loans purchased by the Government-Sponsored
Enterprises or from any unregulated alternative product that does
not provide comprehensive coverage against nearly a third of all
claims."
Unlike other lines of insurance, title professionals perform
significant curative work upfront to resolve title defects
before the transfer of property ownership rights –– approximately
22 hours to close a standard transaction and 45 hours for more
difficult transactions (which represent 36% of all transactions),
according to a recent study by ndp | analytics. Additionally, when
claims arise, title insurers are there to resolve those claims for
the policyholder and defend their property interests. In 2022
alone, insurers paid out $596 million
in claims.
Other key findings from the analysis include:
- Fraud and forgery claims are among two of the top
three leading causes of loss and are five times more costly (at
over $143,000 in total average claim
costs) than all other claims, which average over $26,000.
- Fraud and forgery claims are on the rise due to
threats from cybercrime, rising from 19% of total reported claims
in the category of basic risks between 2013 and 2020 to 44% of
claims within that category in 2022 alone.
- For claims on Owner's policies only, the average cost of
fraud and forgery claims is more than $100,000, while the average claim cost for all
other claims is more than $27,000.
- For claims on Loan policies only, the average cost of
fraud and forgery claims is more than $194,000, while the average claim cost for all
other claims is more than $23,000.
About ALTA
The American Land Title Association, founded in 1907, is
a national trade association representing over 6,000 title
insurance companies, title and settlement agents, independent
abstracters, title searchers and real estate attorneys.
Media Contact:
Megan Hernandez
1-202-261-0315
mhernandez@alta.org
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SOURCE American Land Title Association