Focus on National Title at Insurance Consumer Advocate Title Insurance Roundtable; Florida Department of Financial Services Seeks Prospective Portfolio Transfer Company Response in Seven Days

In response to the insolvency of National Title Insurance Company (“National Title”), Florida Insurance Consumer Advocate Sean Shaw held a roundtable meeting today, August 18, 2010, to review related title insurance issues. Several industry representatives were present to discuss policies that could prevent future title insurance insolvencies.

Before the roundtable participants began their discussion, the Florida Department of Financial Services (“DFS”) C. Sha’Ron James, Assistant Division Director of Rehabilitation and Liquidation, reviewed the current status of National Title.  In July 2009, the DFS Divison of Rehabilitation and Liquidation was appointed as the Receiver due to the company’s financial situation.  

Presently, the DFS anticipates planning to execute a portfolio transfer agreement, which will include selecting a purchaser consistent with Florida statutes.  Ms. James reported that there are 14 open claims against National Title, with four of those in litigation.  

Expressing serious concern over what he called the “inevitable” liquidation of National Title, Mr. Shaw suggested that, in the event the company’s policies are to be canceled, he would increase his public involvement in the matter.  This could include issuing newspaper editorials, initiating legislative involvement or other actions. 

One roundtable panelist suggested the need for a title insurance guaranty fund that could be supported by policy surcharges.  Others suggested that post-funding mechanisms would be more sensible.

In response to industry questions on the National Title matter, DFS officials said that the most prudent plan of action is a loss portfolio transfer.  

Having already initiated the portfolio transfer company selection process, the DFS officials reviewed questions that are being asked of prospective companies.   These include: 

1) Are you willing to take over for National Title Insurance Company?
2) What price do you require to take over the company?
3) What assessment are you willing to pay if no companies are willing to take over the Company?

Interested companies should respond to DFS within seven days.

Roundtable participants agreed that legislative changes will be necessary to improve the industry.  Presently, a working group is crafting bill language in preparation for the 2011 Florida Legislative Session.

Following this discussion, Mr. Shaw concluded the meeting.  To view today’s meeting agenda, click here.

Should you have any questions or comments, please contact Colodny Fass.