Two title insurance companies under the First American Corp. umbrella have agreed to pay $240,000 in fines for allegedly failing to make sure that independent title agencies writing policies on their behalf used the correct rates.
First American Title Insurance Co. and Land Title Insurance Co. of St. Louis allowed title agencies to use incorrect risk rates, or rates not filed with the Missouri Department of Insurance, regulators said.
First American agreed to pay $150,344 in fines, and Land Title Insurance Co. — which was purchased in 1980 by First American Financial Corp. but remains an independent underwriter — paid $90,800 to settle the charges.
Land Title Insurance referred a request for comment to First American, where a spokeswoman said the company was preparing a response that was not available by Friday’s publication deadline.
According to the settlement stipulations signed by First American and Land Title Insurance, both companies paid the fines without admitting any violation of the law, or taking responsibility for the actions of independent title agencies writing policies for them.
A spokeswoman for the Missouri Department of Insurance said the title agencies calculated risk premiums in an inconsistent way, or did not use the rates that First American and Land Title Insurance had filed with the state.
Although Missouri does not set rates, regulators “were trying to ensure that consumers with equal risk were paying equal (premium) price,” said the spokeswoman, Emily Kampeter. Title insurance companies “need to make sure the rates they file with this department are being used consistently and fairly across the board, across all (title) agencies that work on their behalf.”
Missouri Gov. Matt Blunt last year signed into law legislation overhauling the state’s title insurance regulations, which included requirements that title agencies provide “clear, conspicuous and distinct” disclosure of premiums and charges, including abstract or title search and settlement, escrow or closing fees.
The legislation increased civil penalties for agents who take advantage of consumers from $100 to a fine of up to $20,000 per violation, with a maximum penalty of up to $1 million for multiple violations.
The bill followed enforcement actions taken against 16 title insurance agencies in 2006, which were charged with using rates not approved by the state and misrepresenting to consumers the actual cost of a policy.
Kampeter said about half of those title agencies have reached settlements with the Department of Insurance, and that all are expected to follow suit.
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