The last time Florida set title insurance rates, nobody knew what blogging meant. The Netscape Navigator browser had yet to be introduced. Spam was still a meat product to most people, not electronic junk mail.
It was 1992. Since then, consumer groups say technology has evolved, greatly reducing the expense of making sure properties being sold don’t have liens or other problems. Florida never quite got around to resetting rates, though. Title costs of $2,153 in Florida for a $200,000 home are 50 percent to 80 percent above those of neighboring states, a Bankrate.com survey released last year based on 2011 costs found.
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What is title insurance?
It’s something nearly everyone who wants to buy or refinance a home has to pay for because lenders typically require it. The definition from the state’s Office of Insurance Regulation: “Title insurance insures owners of real property, or lenders using real property as collateral, against loss arising out of defective or invalid titles and the existence of other liens or other legal claims against titles to real property.”
For more information
Comments are open until July 22 on an early stage of Florida’s review of title insurance rates that involves deciding what data to gather from insurers.
Florida’s costs are higher, surveys say …
A Bankrate survey last year found Florida’s title costs were significantly higher than its neighbors and nearly double those of Iowa, which has a registry system designed to replace title insurance. Some industry and state officials question the accuracy of such comparisons because state systems can vary, but the survey appeared to back up a 2006 report by a state analyst that Florida’s costs were the highest in the region.
Buyer’s average title cost for $200,000 home
Source: Bankrate.com 2011 Closing Costs Survey (includes title insurance and related costs)
… but are they justified?
Industry officials sometimes suggest Florida’s foreclosure and fraud problems are one reason higher rates may be justified, but title insurers reported lower losses in Florida as a percentage of 2012 premiums compared to adjacent states.
State Premiums earned Direct losses paid Percentage
Florida $889.3 million $77.2 million 9 percent
Georgia $211.3 million $20.8 million 10 percent
Alabama $79.8 million $11.9 million 15 percent
Source: American Land Title Association, 2012 annual statement