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Consumer-friendly title insurance proposals adopted by Texas Department of Insurance

Synopsis

Consumers can expect to see cost savings and other benefits when purchasing title insurance after Sept. 1, 2019. The Texas Land Title Association proposed these rate and rule changes to the Texas Department of Insurance (TDI) as part of TDI’s regular rate review process.


Key takeaways:

  • The basic premium rate for title insurance has been reduced 4.9 percent.
  • Simplified, larger premium discounts have been approved for refinance transactions (i.e., 50 percent within four years and 25 percent in years four-eight).
  • New discounted pricing tiers are now in place for high-end commercial transactions at $25 million, $50 million and $100 million.
  • An expanded simultaneous issue rate credit will be available for 90 days on transactions $5 million and above. For cash buyers who secure financing after closing, this change represents significant cost savings.

Like our friends and customers who operate in the commercial real estate sector, Texas title insurance professionals remain responsive to consumer feedback and eager to sustain and grow our state’s successful real estate economy.

During a periodic review of our rates that the Texas Department of Insurance (TDI) started in 2018, the Texas Land Title Association (TLTA) proposed a package of consumer-friendly rate and rule changes that were adopted by TDI in June.

After these changes went into effect Sept. 1, commercial interests and other Texas consumers can expect to see significant cost savings and other benefits.

Basic premium rate decreased by 4.9 percent

Promulgated rates are established based on annual statistical financial data (e.g., profit and loss figures) reported to TDI by title agents and underwriters. After looking back at years of statistical data and utilizing the rate formula that has been established over time as part of the Texas system, TLTA and the Office of Public Insurance Counsel recommended a rate decrease of 4.9 percent that ultimately was adopted by the Commissioner of Insurance.

Refinance rate reduction

Instead of the existing chart of six different credits which decrease gradually over seven years, the new rates will provide the following: a 50 percent credit within four years and a 25 percent credit between four and eight years. This simplified approach provides a deep rate reduction and responds to significant feedback from residential and commercial consumers alike.

New discounted price tiers on large transactions

New discounted price tiers for high-end commercial transactions starting at $25 million, $50 million and $100 million+ will now be available. This change modernizes the rate chart to recognize the size of today’s transactions.

Simultaneous issue discount expansion

Some purchasers close with cash to ensure the property can be acquired, then secure permanent financing at a later date. Texas’s title insurance system will now provide a simultaneous issue rate credit for 90 days on transactions $5 million and above. This change prevents purchasers from paying the full title premium when the financing is secured within 90 days, and represents a significant savings. The discounted premium would be $100 for each loan policy under these circumstances, rather than the full premium.

Construction credit expansion

The credit for developers of large construction projects will be extended from one year to two years and a simultaneous issue rate will be provided for the loan policy. This change allows builders and investors more time to complete the sale. Also, the existing rate rule does not expressly recognize the use of the simultaneous issue rate in these cases, so this change will clarify the availability of the discounted rate.

Texas’s title insurance industry and TLTA are grateful for the close working relationship, open lines of communication, and the common purpose we share with the Texas Apartment Association and all our commercial real estate partners. If you have questions about any of these changes, please contact Aaron Day, Director of Government Affairs and Counsel for TLTA, at 512/810-8800 or  aaron@tlta.com.

Mike Savas is President of the Texas Land Title Association and SVP Texas Agency Region for First American Title.

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