Florida Insurance Commissioner Kevin McCarty Announces Settlement Agreement With Title Insurer

The Florida Office of Insurance Regulation released the following information regarding the resolution of joint investigation of The First American Title Insurance Company. 

As a result of the settlement agreement, First American has agreed to pay $5 million in investigation and legal costs within 30 days. The agreement also requires First American to cease business with its Florida partnership entities and provides for a monitor to review the company’s business practices over the period of one year.

To read previous information on state hearings regarding Florida’s title insurance industry, click here.

Should you have any comments or questions, please do not hesitate to contact this office.

 

Florida Insurance Commissioner Kevin McCarty Announces Settlement Agreement With Title Insurer

TALLAHASSEE, Fla. (11/16/2007) – Florida Insurance Commissioner Kevin McCarty today announced that he has signed an agreement resolving an ongoing joint investigation of The First American Title Insurance Company (First American) by the Florida Office of Insurance Regulation (Office), the Florida Department of Financial Services, the U.S. Department of Housing and Urban Development.

The investigation looked into First American’s business practices and into the allegations of its use of affiliated agencies to provide payments to real estate agents, mortgage brokers, banks and homebuilders for the referral of title insurance business. 

“Federal and state laws prohibit companies from taking unfair advantage of the market by providing payments to real estate agents and mortgage brokers for their referral of business,” said Commissioner McCarty. “Such payments adversely impact the home-buying public by increasing the cost of buying a home and are a further indication of the need for legislative reform of the regulations governing the title insurance industry. I am convinced that this will send a clear message to others that this sort of thing will not be tolerated in Florida.”

The affiliated agencies utilized individuals such as real estate agents, mortgage brokers, banks and homebuilders as investors for the purpose of referring title insurance business to them and promised payment of a percentage of the premium dollars from the resulting title insurance transactions. This was determined to have resulted in significant financial benefit to First American and its affiliated agencies.

As a result of the settlement agreement, First American has agreed to pay $5 million in investigation and legal costs within 30 days. The agreement also requires First American to cease business with its Florida partnership entities and provides for a monitor to review the company’s business practices over the period of one year.

In August, the Office held a hearing in which subpoenas were issued to several members of the title insurance industry, calling them to appear before a panel and answer questions relating to the sales practices of title insurance in Florida. Video <>  of this hearing can be viewed on the Office’s Web site by clicking here.