Wednesday, January 18, 2006 | The article written by Will Carless on Jan. 12, 2006 (“Insurance Commissioner vs. Title Insurers”) should have been more properly entitled “Birny Birnbaum vs. Reality.” The conclusions contained in his report regarding rates and competition in the title insurance industry are simply inaccurate.
The truth is that consumers have benefited from the low prices generated by a highly competitive title insurance marketplace in California.
During the course of a Department of Insurance workshop earlier this month examining Birnbaum’s report, nationally recognized competitive market analysis expert Gregory Vistnes – a former executive at the Federal Trade Commission and U.S. Department of Justice – found that Birnbaum’s conclusions had “no basis in fact” and flowed from “an inappropriate and error-ridden analytic methodology.” Vistnes concluded that the Birnbaum report should be “disregarded by public policymakers.”
Additional expert analysis submitted by consulting actuary Mike Miller found that the Birnbaum report failed to perform the actuarial analysis necessary to support the conclusions contained therein regarding title rates. The complete testimony of these two experts can be found on the California Land Title Association Web site along with other materials that definitively disprove all of the ridiculous assertions made by Birnbaum.
The California Land Title Association is dismayed, then, that Insurance Commissioner John Garamendi has chosen to rely upon the fundamentally flawed Birnbaum report to make irresponsible statements about the state’s title insurance industry. A more constructive, honest examination of the industry would show that competition is alive and well in the state. More importantly, fierce competition amongst the nearly 100 title companies licensed to do business in California has ensured homeowners get a great value when purchasing a title insurance policy.
An independent analysis of title insurance rates by the financial Web site www.BankRate.com found title insurance prices in California lower than the national average and far lower than prices in other large states. In fact, as mentioned in the Carless article, consumers can even price shop for title insurance on the Department of Insurance Web site.
Interestingly, the Birnbaum report failed to acknowledge – or intentionally ignored – substantial rate reductions filed by title companies in California during the past several years. Many of these rate reductions clearly appear attributable to price competition amongst title companies as they vied for business in the hot refinance and home equity loan markets.
In conclusion, the California Land Title Association and its member companies would like to thank the Realtor and lender representatives who commented in the Carless article. They clearly understand the fact that consumers rely on real estate professionals to help them through the increasingly complicated home buying transaction in California. They also recognize the fact that healthy competition exists amongst title companies.
If Birnbaum had taken the time to talk to even one real estate professional in California, he wouldn’t have displayed such an embarrassing lack of knowledge as evidenced in his flawed report.
Title insurance professionals welcome an informed, productive discussion about the industry, its products and how to best educate consumers about their ability to shop around for real estate service providers. We hope that Commissioner Garamendi will join us in this effort.
Lawrence E. Green is executive vice president and counsel of the California Land Title Association, a nonprofit corporation that represents member title companies throughout the state of California.