July 23, 2006
Commissioner Proposes Rate Reduction
California’s Insurance Commissioner John Garamendi is continuing with his line of attack against the insurance industry. The latest salvo comes in the form of a proposal to reduce title insurance rates for home purchases by as much as 23 percent, cut back on the cost of title insurance for home refinancing by 16 percent, and slash the cost of escrow services from escrow companies that are run by title insurers by 27 percent.
The Commissioner said that the price of title insurance had shot through the roof over the past years because of the lack of competition and the rise in the price of houses. Over 80 percent of the title insurance market in California is controlled by only three companies – First American, Fidelity, and Land America.
Garamendi has already hit the headlines for his investigations into high homeowner insurance rates and his subsequent imposition of a 16 percent reduction in workers’ compensation rates. He has also proposed new regulations that will allow the Insurance Department fix a ceiling on future title insurance rates.
The insurance industry is up in arms against the Commissioner’s tactics. It argues that if this crackdown continues, more insurers will be forced to down shutters being unable to stay competitive.
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