Articles of Interest
June 30, 2008
Stewart unveils simplified, reduced rate structure in California
In pursuit of more transparency into title insurance rates and to help consumers comparison shop, Stewart Title Guaranty Co. recently simplified and reduced its rates in California.
Brian Hurley, president of Stewart Title of California, said the company performed a comprehensive review of its rate manual and determined an overhaul was needed because of confusion and current market conditions.
The California Department of Insurance has approved Stewart’s new rate structure, which includes three core rates - a basic rate, a residential rate and the Stewart Title Absolute Rate (STAR). The new rates, which went into effect immediately, are available to all agents that write on Stewart Title Guaranty paper. Escrow rates are not affected by this filing and will continue to be determined on a county-by-county basis.
“Stewart constantly works to develop new solutions to exceed our customers’ needs, and our new California title rates are no exception,” said Allan Wasserman, executive vice president and western states manager for Stewart Title Guaranty. “We are always striving to meet the needs of our customers, including the consumer, and these lowered rates will provide an immediate benefit to consumers and businesses that are selling, purchasing or refinancing California properties.”
Stewart eliminated several rates that fueled confusion, such as the Sure Rate, a bundled service rate, an over age 55 rate, a first-time buyer rate and an electronic rate.
Hurley said the Sure Rate - Stewart’s refinance rate - caused confusion because many independent agents didn’t know when it could be offered. Also, a part of Stewart’s southern California division doesn’t facilitate escrow transactions with every title transaction. This caused some frustration because agents wanted to assist their good escrow customers by passing on similar value. The bundled service rate also raised concerns because it provided some relief in title fees if a certain level of services were procured from Stewart.
“Looking at all of our rates, the market and the requirement to compete moving forward, we wanted to develop a rate manual that is cohesive and on point for the type of market we are in,” Hurley said.
Wasserman said he solicited advice from a number of Stewart’s larger independent agents and direct operations prior to new-rate filing to gather input in terms of transparency and understanding of the use of the STAR rate. This rate is available only when all title-related documents are conveyed electronically to all involved parties, a 2006 ALTA Short Form is used and the transaction only has generic exceptions.
The STAR rate is tied to Stewart’s initiative toward going paperless and can efficiently process electronic transactions using the company’s SureClose online transaction management system, the company said.
“Our hope is that the refi market will come alive again,” Hurley said. “As lenders become more efficient and as a drive toward reduction of paper and electronic transmission becomes more common, we expect the appeal of the STAR to continue to grow. It’s pretty clear this will be the future of the mortgage origination business, and we wanted to have a product that played right into that.”
Wasserman said the California Land Title Association (CLTA) was concerned over the transparency of some of Stewart’s rates. He said there has been pressure from Steve Poizner, California’s insurance commissioner, to condense basic rates so the consumer can better understand and review prices.
“One of the things the commissioner has talked about is the whole idea of providing title insurance rates to somehow be as simple as auto insurance rates,” Hurley said.
The new rate structure will allow for easier comparison shopping through TitleWizard, a Web site designed by ClosingCorp and hosted by the CLTA.
After TitleWizard was launched, Hurley said Stewart was motivated to simplify rates all around because TitleWizard wasn’t getting the right rate for some transactions that were being entered online.
“With a complex rate manual that has different types of rates and applicable rate discounts, it becomes very difficult to build a querying mechanism that captures all the transaction’s nuances that may lead to a particular rate for a customer,” Hurley said. “A consumer couldn’t put in enough facts to come out with the perfect rate because there were so many that would apply. We threw the old rates away and made it simple.”
Poizner has aggressively pursued ways to bring transparency to the cost of title insurance. He lauded the CLTA last year when TitleWizard was launched, and congratulated Stewart for its latest effort to streamline rates.
“It’s great to see companies making their rates more affordable for consumers,” Poizner told The Title Report of Stewart’s new rate structure. “I encourage consumers to shop around for their title insurance to find the best rate and best policy for their individual needs.”
Craig Page, executive director of the CLTA, said California’s rate and form filing system allows individual title companies to innovate in the marketplace with new products and rates.
“The ongoing response to consumer demand, along with collective industry efforts such as the CLTA-sponsored TitleWizard Web site, is what makes the California title insurance marketplace so competitive,” he said.
First American, according to a spokesperson, introduced simplified pricing for low- to moderate-income consumers in underserved markets in 2003, and became the first title insurance company in 2005 to offer consumers in most markets a single rate for title, escrow and related services.
"In October 2007, we completely revamped our California Schedule of Fees to make all of our rates clearer, simpler and easier to calculate," the First American spokesperson said. " We began with California, but our intent is to take our program for rate simplification to as many states as practible. Rate simplification is consistent with the objectives of HUD and the California Department of Insurance."
LandAmerica is in the process of developing a simplified rate structure in California as well and expects to file the rates before the end of this year,” according to Peter Habenicht, a spokesperson for LandAmerica.
Fidelity declined to comment on its California rates.
“We suspect the drive for simplification is probably on them as well,” Hurley said. “A lot of our competitors created some market confusion by providing reduced rates that applied if an order was opened through a special streamlined division versus a traditional branch network. That created confusion with lenders and consumers.”
Since TitleWizard’s launch in October, 83 title companies - 15 underwriters and 68 underwritten title companies - have provided rate information on the Web site.
Anthony Farwell, chairman and chief executive officer of ClosingCorp., said consumer activity on the site has been between 65 to 75 percent, however, “it may be that professional users do not designate themselves as such when using the site.”
