Title Premiums Continue Slide but Show Signs of Improvement

For the fifth consecutive year, title underwriter premiums declined but appear to be showing signs of stabilizing. Last year premiums fell just 4.5%, according to new figures compiled by the American Land Title Association. Premiums peaked in 2005 at $16.9 billion. In 2009, underwriters took in $9.6 billion of premiums. However, ALTA chief executive Kurt Pfotenhauer noted that 2009 mortgage volume was driven by tax incentives and low interest rates. In 2010, he noted, refinancings are expected to contract from the 65% share in 2009, and purchase volume is expected to remain flat. California generated the most premium volume: $1.5 billion, up 8.4% over the previous year. The next three states, ranked by volume, all showed a decline from 2008: Texas, $1 billion (-17.6%), Florida, $700 million (-23.8%), and New York, $585 million (-22.7%). In terms of percentage, Alaska had the largest increase, 26.3%, followed by Wisconsin, 17.6%, and Montana, 15%. "As indicated by these results, the profitability of the title insurance industry always has been and always will be contingent on the cyclical nature of the mortgage market," Pfotenhauer said. "The scattered improvements illustrate real estate is an extremely local business. Each market performs differently depending on local economic conditions."