New York Insurance Superintendent Howard Mills said there appears to be growing consensus that the state legislature should license title insurance agents, a move he feels the industry now backs.

Mr. Mills, in addition to discussing title insurance in an interview with National Underwriter, said that with a new governor taking office on Jan. 1, he will be resigning his post in December.

On Nov. 3, when his department held hearings to get information about title insurance programs, "we did not put them on trial," he said.

Title insurers have been under increasing scrutiny since investigations in several states have uncovered what officials said were entrenched systems where title companies used illegal incentives and inducements to steer business their way.

"One of the most interesting things to come out of it was that there were a lot of industry folks who feel we really do need to look at licensing of title agents," said Mr. Mills.

He said bills were introduced in the past to license title agents, but they were defeated by the industry. Since it came to light that title companies were involved in alleged kickback schemes, the industry is now seeking remedies to improve transparency.

"Many of the professionals out there who are concerned about disreputable actors in the industry see licensing as good quality control," said Mr. Mills. "They understand that they run a quality operation and they are not afraid of the transparency requirements."

Mr. Mills said the hearing obtained a lot of information about the pricing and content of title insurance and what consumers get for it. He said it was helpful information that, going forward, will help the department protect consumers.

One thing to come out of the hearing was that the product is in need of greater transparency for the buyers.

"The typical buyer of title insurance does not understand what they are buying," said Mr. Mills.

Underscoring this was one thing he found disturbing: the gratuities title agents receive at a home closing. He said there was testimony that agents receive as much as $250 because it is tradition to do so.

Mr. Mills was appointed by Republican Gov. George Pataki, who leaves office at year's end to be replaced by Democrat Eliot Spitzer, currently New York attorney general.

The superintendent said while there is only about a month-and-a-half left to his term, he will continue to work to reform the title insurance industry. Mr. Mills said the department is working on creating a unit that will concentrate on investigating title insurance abuses.

Mr. Mills said Mr. Spitzer's office had a representative at the title hearing, and he is confident the incoming administration will continue the work of the reform initiated on his watch. He added that the insurance department and the attorney general's office have worked closely on this issue.

The attorney general's office, in written testimony submitted by Assistant Attorney General Hannah K. Flamenbaum, outlined alleged abuses uncovered in its investigation of the industry.

Ms. Flamenbaum said the investigation of the title industry continues. She requested that no findings be issued by the insurance department until the attorney general's office has completed its investigations.

She noted that despite a 15 percent decrease in premium among the state's top title insurers, New York homeowners still pay the highest premiums in the country.

Ms. Flamenbaum said that the Title Insurance Rate Service Association, which submits rating information to the insurance department, is controlled by the carriers--an apparent conflict of interest--and has never applied for a decrease, despite company profitability.

For his part, Mr. Mills said that as he leaves office he will assist the incoming commissioner in the transition.

"I've always looked at this as a two year stint," said Mr. Mills. "I always expected that the next governor would want to name his own cabinet, so I plan on leaving the department in December to pursue opportunities in the private sector."

As far as any additional actions to be taken against title insurers, he said there was nothing that he could discuss at this time.

Special Reports /

N.Y. Title Insurance Agents Need To Be Licensed

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