Following its passage in the Assembly, state senators are entertaining a bad bill that would give title insurance companies free rein in New York, just a few short years after state regulators succeeded in curbing the billion-dollar industry’s worst abuses.
Don't do it.
What is title insurance? It’s a simple product to secure the chain of ownership of a property, so there’s no question who owns what, when.
In some states, the system is run by the state and cheap for consumers. In others, robust and well-regulated private markets keep costs contained.
Here in New York, purchasers must buy title insurance, but they don’t typically pick their own insurer; the real estate lawyers handling the transaction do. That creates a perverse market, where insurers market themselves to middlemen who steer business to them.
The favor-trading had grown out of control, with insurers plying the lawyers they depend on for referrals with lavish meals, tickets to sporting events and strip clubs, and passing the costs on to regular New Yorkers.
A state investigation under Financial Services Superintendent Maria Vullo found New Yorkers pay the highest title insurance premiums in the country.
So state regulators in 2017 placed limits on insurers’ practices. The industry sued, in a case that went up to the state Court of Appeals, and rightly lost.