The Title Insurance Industry Objections to DFS Regulation 208 (11 NYCRR 228)

TALKING POINTS

Regulation 208 prohibits most sales and marketing practices – such as coffee during a meeting or an introductory lunch - which are legal and customary in other regulated industries.

Regulation 208 gives title companies the option of a costly, technically complex and logistically difficult refiling of six year’s operating expense data or accept a broad 5% reduction in insurance premiums rates.

DFS overstates title industry marketing expenditures based on anecdotal information.  The NPD Analytics Report show title agents spend 2-5% of the their annual budget on marketing. This is well below the 7-8% recommended by the Small Business Administration.

Regulation 208 also seeks to control business activity outside their authority over title insurance by capping fees for non- title services and adding the expense for non-title insurance services performed by closers.

Typical services performed by title agents that are NOT necessary for title insurance:

·         Pick-ups/satisfaction of an existing mortgage - under certain circumstances Regulation 208 forces agents to provide services without compensation

·         Surveys and searches such as bankruptcy, Patriot, municipal departmental – fees are capped below the cost of providing the service

“Connect the dots” - The NPD Analytics report shows a 40.7% decrease in title agent net income if the 5% rate reductions, the loss of compensation for ancillary services and the added cost absorption are in place as a result of Regulation 208.

What can be done?

S6704 - A8467 clarifies insurance law so that the longstanding definition requirement of a quid pro quo requirement of "inducements" is re-established.

S7901- A10207 clarifies that DFS does not have authority to regulate fees for non-insurance services.

Legislation should be introduced to clarify that DFS does not have authority to regulate fees for non-insurance services.

Include these proposals in the state budget to provide immediate relief to at-risk businesses.