Both sides are claiming victory in a dispute over proposedregulations for the title insurance industry in California afterthe state Office of Administrative Law returned the regulations tothe insurance department for clarification.

The proposed regulations would have established interim maximumrates and required title insurers to report their costs andoperations, which would be the basis for more long-term maximumrates.

"The OAL's review effectively validates the department'sauthority to issue such regulations, but OAL has asked thedepartment to make specific changes to clarify certain terms andeliminate certain ambiguities which OAL found," said StateInsurance Commissioner Steve Poizner.

Mr. Poizner said his department will make clarifications, inconsultation with industry and consumer groups, and resubmit theregulations.

"I am confident that they will be approved and that theseimportant consumer-protection measures will go into effect," hecommented.

However, Escrow Institute of California President P.J. Garciapraised the ruling as a "huge victory for the hundreds ofsmall-business owners who dared to fight back against an abuse ofpower" by former insurance commissioner and current LieutenantGovernor John Garamendi, who initially proposed theregulations.

"It was clear from the beginning that former CommissionerGaramendi was attempting to besmirch the good name of licensedescrow companies just so he could score a few political points inan election year," Ms. Garcia said.

Mr. Garamendi, said Mr. Garcia, didn't "anticipate thedetermination of hundreds of escrow officers, a predominatelywoman-owned industry, to stand up to his bullying tactics and fightback with the truth about the escrow industry in California."

Action by the former commissioner followed investigations of thetitle industry in various states and in Congress which turned upevidence that title insurers were paying kickbacks to have businesssteered their way by developers and others.

Mr. Poizner said that, based on his own review, he agreed withhis predecessor's views on the need for reform. Among the mainreasons he noted is that while the costs of researching a titlehave come down through advances in technology, the prices for titleinsurance have significantly increased.

"I want to emphasize that I am a strong believer in the freemarket and am skeptical of price regulation," Mr. Poizner said."But I am also a realist, and it is clear that where, as here, themarket is not functioning properly, strong government action isnecessary to protect the public."

Although he said he would "aggressively implement theseregulations," Mr. Poizner added that he also intends to introducestructural reforms in the escrow market to induce competition.

"Consumers are entitled to a market in which they aresovereign," he said. "I am determined to make that the reality inthe title and escrow markets."