Florida Insurance Commissioner Kevin McCarty Announces Settlement With First American Title
TALLAHASSEE, Fla. (11/16/2007) - Florida Insurance Commissioner Kevin McCarty today announced that he has signed an agreement resolving an ongoing joint investigation of The First American Title Insurance Company (First American) by the Florida Office of Insurance Regulation (Office), the Florida Department of Financial Services, and the U.S. Department of Housing and Urban Development.
The investigation looked into First American's business practices and into the allegations of its use of affiliated agencies to provide payments to real estate agents, mortgage brokers, banks and homebuilders for the referral of title insurance business.
"Federal and state laws prohibit companies from taking unfair advantage of the market by providing payments to real estate agents and mortgage brokers for their referral of business," said Commissioner McCarty. "Such payments adversely impact the home-buying public by increasing the cost of buying a home and are a further indication of the need for legislative reform of the regulations governing the title insurance industry. I am convinced that this will send a clear message to others that this sort of thing will not be tolerated in Florida."
The affiliated agencies utilized individuals such as real estate agents, mortgage brokers, banks and homebuilders as investors for the purpose of referring title insurance business to them and promised payment of a percentage of the premium dollars from the resulting title insurance transactions. This was determined to have resulted in significant financial benefit to First American and its affiliated agencies.
As a result of the settlement agreement, First American has agreed to pay $5 million in investigation and legal costs within 30 days. The agreement also requires First American to cease business with its Florida partnership entities and provides for a monitor to review the company's business practices over the period of one year.
In August, the Office held a hearing in which subpoenas were issued to several members of the title insurance industry, calling them to appear before a panel and answer questions relating to the sales practices of title insurance in Florida. Video of this hearing can be viewed on the Office's Web site.
About the Florida Office of Insurance Regulation
The Florida Office of Insurance Regulation (Office) has primary responsibility for regulation, compliance and enforcement of statutes related to the business of insurance and the monitoring of industry markets. Business units within the Office are organized based on regulatory expertise and include the areas of life and health, property and casualty, specialty lines and other regulated insurance entities. It is within the Office that the mission of public protection is implemented through regulatory oversight of insurance company solvency, policy forms and rates, market conduct performance and new company entrants to the Florida market.
For more information about the Office, please visit www.floir.com.
# # #