Title Insurers See Higher Claims
The American Land Title Association announced gross revenue for the title industry for the first six months of this year was $7.49 billion.
That is 36.5% ahead of the same timeframe in 2002, which was a record year for the industry despite rising claims.
Rich McCarthy, ALTA's director of research, said, "The effect of near-record-low mortgage rates continues to be felt in the real estate industry ew sales, existing sales and refinancings are all at, or near, record levels."
The loss ratio (losses and loss adjustment expenses as a percentage of total operating income) fell to 3.64% from 4.24% for the first half of 2002.
The level of pretax profit for the period was $454 million, compared with $156.1 million last year, which ALTA said reflects the strength of the market, coupled with costs increasing less than revenue.
On an after-tax basis, including investment income, title insurers earned $436.2 million, compared with $227.7 million.
Separately, ALTA announced earlier in the year that the title industry paid about $582.7 million in claims in 2002, up from $465.1 million the previous year.
These payments were made to or on behalf of insured homeowners for losses they experienced under policies issued to them or their lender, or to defend those titles from the claims of others.
Unlike other forms of insurance, title insurance is based on actions that have already occurred, not on what may occur in the future.
ALTA estimates that title "problems" arise in one out of every four real estate transactions, but most are resolved before closing.
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