alta federal conference

ALTA

ERVIN | BELL M A R K E T I N G C O M M U N I C A T I O N S

ALTA FEDERAL CONFERENCEALTA FEDERAL CONFERENCE

March 7-8, 2006Washington, D.C.

ALTA


OVERVIEWOVERVIEW

• Identify current climate, key issues and

opportunities

• Provide a set of messages members can use

• Ensure that we are all forwarding positive,

consistent messages

ALTA


CURRENT CLIMATE

• Reinsurance issue in 2005

• Birnbaum report in California

• Colorado DOI investigation into

ABAs

• Agent defalcations (CO, NY)

• U.S. Rep. Michael Oxley’s letter

to the GAO

ALTA


KEY ISSUES & MISPERCEPTIONSKEY ISSUES & MISPERCEPTIONS

• Title insurance costs too much

• Claims are low compared to other lines of insurance, so you are overcharging

• There is a lack of competition in the title industry, keeping costs high

• Technology should lower prices

• Monoline restrictions keep competitors out of the market

• Iowa has a better title insurance system

• The title industry has engaged in bad conduct

ALTA


KEY ISSUES & MISPERCEPTIONSKEY ISSUES & MISPERCEPTIONS

There may also be questions raised about:

• The GAO “Study”

• RESPA Reform

• Federal Regulation of Insurance

ALTA


OPPORTUNITIESOPPORTUNITIES

• Educate our audiences about title insurance.

• Clear up the misinformation and confusion.

• Communicate the value and benefits of this important

protection.

ALTA


TOP 10 MISPERCEPTIONS & QUESTIONSTOP 10 MISPERCEPTIONS & QUESTIONS

ALTA


#1 COST#1 COST

Some have criticized the cost for title insurance. Are premiums in line with the value of the product?

• A one-time premium covers the life of a loan and/or

property ownership. For the price, it’s a bargain.

• Rates are heavily regulated.

• Rates must ensure reserves and solvency of

insurers.

ALTA


#2 CLAIMS#2 CLAIMS

Why do title insurers only pay 5% of premiums in claims when property and casualty companies pay 70%? Aren’t you gouging consumers to increase your profits?

• Title insurance is based on loss prevention rather than loss assumption. The majority of our costs are on the front end.

• Our expenses total 90% of the premium dollar compared to P&C companies at approximately 25%.

ALTA


#3 COMPETITION

When closing services are largely selected by disinterested third parties (i.e. real estate and mortgage professionals), doesn’t that foster a non-competitive atmosphere, at least in terms of price?

• In truth, consumers choose not to get involved in the process.

• Title companies compete fiercely for business with

“third-parties”.

• Consumers should be helped to understand why

they need this important protection.

• ALTA’s Web site has information to help

consumers make informed decisions.

ALTA


#4 TECHNOLOGY#4 TECHNOLOGY

Haven’t advances in technology made it easier to do a title search, and shouldn’t prices reflect that?

• Title searches are not like a “Google” search.

• Only 10-15% of counties have automated title files.

• Most rely on manual searches of paper-based

archives.

• Counties don’t have the budget to automate title

data.

• Private “title plants” are expanding, but represent a

considerable cost.

ALTA


#5 MONOLINE#5 MONOLINE

What are monoline restrictions, and are they still applicable today? Don’t they prevent competitors from entering the market, which would lower prices?

• Monoline restricts companies writing certain high-

risk lines of insurance to writing only those lines.

• Monoline ensures the reserves and solvency of

insurers for the protection of policyholders.

• Non-title insurers lack appropriate reserves and

underwriting experience for title insurance.

ALTA


#6 IOWA SYSTEM#6 IOWA SYSTEM

Iowa’s system of title insurance is run by the state. Why haven’t other states followed Iowa’s example?

• Most Iowa mortgages are insured out of state.

• Only half of title losses are covered by Iowa system.

• As a government-run monopoly, there is no

competitive incentive to keep pace with markets

and consumer needs.

ALTA


#7 INDUSTRY CONDUCT#7 INDUSTRY CONDUCT

We keep hearing about agent defalcations, kickbacks, and regulatory actions being taken against title companies. Is this an industry-wide problem?

• Every industry has its share of “bad apples” and fraudulent activity.

• Fraudulent practices should be prosecuted to the full extent of the law.

• ALTA supports practices that are compliant with the laws and regulations governing the title industry.

ALTA


#8 GAO#8 GAO

Why is the GAO looking into the title industry?

• The complexity of our business has created

misinformation and misunderstanding about title

insurance.

• ALTA met with and is assisting the GAO fully.

• We view this as an opportunity to clear up the

confusion that exists in the marketplace.

ALTA


#9 RESPA REFORM#9 RESPA REFORM

Does the title industry support RESPA reform, and how will that impact your business?

• ALTA supports HUD’s efforts to make the home

buying process more transparent for consumers.

• ALTA actively participated in all HUD-sponsored

workshops last year.

• It is unknown when HUD might publish a

proposed rule, or what that rule might include.

ALTA


#10 FEDERAL REGULATION OF INSURANCE#10 FEDERAL REGULATION OF INSURANCE

What about regulating title insurance at the federal level. Will that work?

• No.

• Title insurance is very tied to local customs and

laws.

• It represents an enormous undertaking to establish

federal regulations that reflect variations in all 50

states.

• State regulators can respond to the local

marketplace more quickly.

ALTA


OPPORTUNITIES AND TOOLSOPPORTUNITIES AND TOOLS

ALTA


UPCOMING OPPORTUNITIESUPCOMING OPPORTUNITIES

National Homeownership Month – June 2006

• Proclamation by President Bush

• Supported by HUD Workshops throughout

the country

ALTA


HOMEOWNERSHIP MONTHHOMEOWNERSHIP MONTH

Presidential Proclamation:

“From the earliest days of our Nation, homeownership has embodied the core American values of individual freedom, personal responsibility and self-reliance. Homeownership is also a bedrock of the American economy, helping to increase jobs, boost demand for goods and services, and build prosperity.”

ALTA


HOMEOWNERSHIP MONTH

The Title Industry:

For 125 years, the title industry has protected the American dream of homeownership. The land records and title insurance system in the U.S. allows people to secure loans on real estate to build, be entrepreneurial, create jobs, and grow our economy.

ALTA


HOMEOWNERSHIP MONTHHOMEOWNERSHIP MONTH

Opportunities for Local Involvement:

• Find out what’s happening in your community.

• Initiate a proclamation by your local government.

• Sponsor a booth at a local fair.

• Give a presentation to a local civic group.

• Place an ad and/or article in your local

newspaper.

• Participate in a ‘Habitat for Humanity’ project.

ALTA


TITLE INDUSTRYMARKETING KITTITLE INDUSTRYMARKETING KIT

Promote your business while forwarding our value proposition

New addition: Member Article Library (look for article on NHM in May)

Promote your business while forwarding our value proposition

New addition: Member Article Library (look for article on NHM in May)

ALTA


QUESTIONS AND ANSWERSQUESTIONS AND ANSWERS

alta federal conference

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