Title insurers paid approximately $661.7 million in claims in 2003, up from $582.7 million the previous year, according an industry study released by the American Land Title Association. The payments were made to insured homeowners for losses they experienced under policies issued to them or their lender, or to defend those titles from the claims of others.
“The public misperception that title insurers do not pay substantial claims results from a lack of understanding of what title insurance is and how it protects homeowners,” said James Maher, EVP of ALTA.
Maher added that the title industry spends more than 10 times the amount it pays in claims to perform title searches and cure title problems in order to avoid claims. Unlike other forms of insurance, title insurance is based on actions that have already occurred, not on what may occur in the future.
An ALTA survey of 420 abstracters and agent operations showed that title problems arise in one out of every four real estate transactions.
ALTA represents title insurance companies and their agencies nationwide on a variety of industry and legislative issues. Members of the association search and insure land titles to protect real estate investors including home buyers and mortgage lenders.
ALTA also released financial figures showing that gross revenue for the first half of 2004 was up 7.96 percent to $7.6 billion from 2003, for the industry as a whole. The loss ratio was 4.27 percent, compared with 3.89 percent for the first six months of 2003. The level of pre-tax profit was $396 million in 2004, compared with $453 million during the same period in 2003.
On an after-tax, after investment income basis, industry profits totaled $406.8 million, down from 2003’s figure of $431.9 million.
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