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insurance task force. The information provided by the NAIC with reference to its ongoingstudy is referenced elsewhere in this report.National Coalition of Insurance Legislators - The Deputy Executive Directoradvised that at NCOIL’s Fall meeting held in November, 2012, the Property and CasualtyInsurance Committee held a special discussion of title insurance regulation and consumerprotections. The Committee heard from underwriters, title insurance producers, and theNAIC. The Committee is to examine whether there are any gaps in regulation andprotection that may be addressed through model laws. The Committee is scheduled toreport its findings at the NCOIL Spring meeting to be held in March 2013.National Conference of State Legislatures - The NCSL’s Program Principalprovided the MIA with a list of legislation that had been proposed for the title insuranceindustry. The list indicated which proposed laws were enacted, failed, or remainedpending as of October 19, 2012.3. Trade Associations’ PerspectivesAmerican Land Title Association - ALTA provided the MIA with a preview ofthe best practices guideline it is developing for its members. The guideline is intended toestablish protocols which, upon implementation, will “protect consumers, ensure qualityservice, and meet legal and market requirements.”Maryland Land Title Association - MLTA advised that although conducting theannual on-site examination may help to reduce escrow theft, it is costly and may notproduce evidence of actual losses. In MLTA’s view, enhancing auditing requirementswill result in increased closing costs and premiums.As discussed above, MLTA determined that from 2008 through 2011, it cost ten26
title insurance companies, representing 92% of the business written in Maryland in 2011,$4,779,831 to conduct the annual on-site examinations of their appointed title produceragencies. According to MLTA, the same ten underwriters insured 712,406 transactionsduring the same time period. MLTA’s data indicate that over a four-year period the costof the annual on-site review of the underwriter’s appointed producers is equivalent to$6.71 per real estate closing.4. A Title Insurance Company’s PerspectiveSecurity Title Guarantee Corporation of Baltimore - The President of SecurityTitle, also an MLTA Board Member, supports the MLTA position that a CPL should berequired by law and paid for by consumers.5. Title Insurance Underwriters’ Loss RatiosAs part of the Study, the MIA undertook an analysis of the losses incurred by thetitle insurance industry. From 2004 through 2011, the title insurance industry paid out,on average, approximately 7½ cents for each premium dollar collected in Maryland. 55The 7½ cents included all Maryland claims paid -- not only those claims associated withthe theft of escrow funds. Focusing on more recent years, during 2009 and 2010, the titleinsurance industry in Maryland paid an average of 10½ cents and 14 cents, respectively,in claims for each premium dollar collected; this amount decreased to approximately 11cents in 2011. 56According to the MIA’s research, however, certain underwriters experienced ahigher loss ratio. In 2010, five of the 17 responding underwriters reported that they paid55 A report published by Demotech, Inc., an independent financial analysis firm, found that for the period2004 through 2011, the aggregate loss ratio for Maryland’s title insurance industry was 7.43%.56 According to the Title Insurer Survey, the aggregate loss ratios for the companies writing title insurancebusiness in the State were 10.58% in 2009, 13.82% in 2010, and 11.37% in 2011. The loss ratio is the totalamount paid or reserved for claims plus adjustment expenses per dollar of premium collected.27
Page 2 and 3: Report of the Study ofClosing or Se
Page 4 and 5: TABLE OF CONTENTSI. EXECUTIVE SUMMA
Page 6 and 7: Although in a minority of states an
Page 8 and 9: or misuse of closing or settlement
Page 10 and 11: (4) Division of Consumer Protection
Page 12 and 13: title insurance producer or agency
Page 14 and 15: As part of its Insurer Survey, the
Page 16 and 17: or dishonest practices, the underwr
Page 18 and 19: eported having a least one escrow a
Page 20 and 21: ond also may be purchased by an und
Page 22 and 23: 4. Other Protection Available to Un
Page 24 and 25: 1. Preventive MeasuresProducer Lice
Page 26 and 27: lender’s funds or documents. The
Page 28 and 29: In the event of the insolvency of a
Page 32 and 33: in excess of 20 cents in claims on
Page 34 and 35: create an environment vulnerable to
Page 36 and 37: Appendix 1MARTIN O'MALLEY, Governor
Page 44 and 45: AppendixAppendix22MARTIN O’MALLEY
Page 46 and 47: Appendix 2c. If you answered “No
Page 48 and 49: Appendix 2Certification of Informat
Page 50 and 51: Appendix 2QUESTION #3Schedule BStat
Page 52 and 53: Appendix 3
Page 54 and 55: Appendix 3SURVEYTitle Insurance - C
Page 56 and 57: Appendix 3a. Does your title insura
Page 58 and 59: Appendix 3QUESTION # 2Schedule ADor
Page 60: Appendix 3QUESTION # 10Schedule CMi

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