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More Bad News for Homeowners

OLDWICK, NJ-Title insurers failures have ancillary effects. Financial impairment figures for properties rose from 2007 to 2008, according to the latest figures from A.M. Best Co.

By Alyson Grala | Updated on April 03, 2009

OLDWICK, NJ-Casualties of the real estate boom and bust, four title insurers have helped to drive up the number of property/casualty financial impairments in 2008. This figure rose to seven, up from five the previous year, according to a report by locally based A.M. Best Co. The four title insurers are primary examples of the top two causes of impairment–deficient loss reserves/inadequate pricing and rapid growth–for more than 50% of the financial impairments over the 40 years covered by the credit rating organization’s study.

Title insurer failures are more bad news for homeowners trying to sell or refinance property in the current down market. These transactions can trigger a title search and a potential claim. Recourse for policyholders can be difficult and, at best, slow, since very few states cover title insurance under their guaranty funds.

Two of the financially impaired title companies, Commonwealth Land Title Insurance Co. and Lawyers Title Co., were subsidiaries of LandAmerica Financial Group, which went into Chapter 11 bankruptcy in November 2008. They were declared in hazardous financial condition by state insurance regulators and were purchased by Fidelity National Financial Inc. in December 2008.

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