Texas has among the highest rates of title insurance in the nation. Unlike almost every other state, Texas’ title insurance system is rigidly anti-consumer and allows for no competition.
Texas sets a single fixed rate for title insurance and does not allow insurers to set lower prices and compete for business from the consumers directly, resulting in higher prices.
To make matters worse, individual citizens are also prohibited from participating in the rate-setting process. Public input is not taken into consideration at hearings related to setting rates for title insurance, nor can citizens request a hearing.
Allowing for no competition, this single rate system for title insurance provides no opportunity for insurers to innovate and offer lower rates. Even if a consumer wanted to shop around, which they can do for almost any other product, Texas law prohibits any rate differential, reduced rates or discounts.
Currently, consumers have no way to effectively participate in the insurance rate-setting process. Individual members of the public are excluded and offered no standing to appear as a party and offer evidence at a hearing.
Only title insurance companies, agents, associations, and government regulators have statutory standing for their input to be considered in the rate-setting hearings. Consumers deserve a seat at the table and a voice in the process.
For homeowners, especially first-time buyers, a lack of competition and fixed rates for title insurance mean they’re paying more than they should, potentially putting a home or better property out of reach.
Additionally, some businesses may not relocate or expand in Texas because title insurance rates on commercial property are also far more expensive than other states.
Title insurance companies are the only ones benefiting from today’s Texas title insurance system.
To help lower prices of title insurance, Texas must provide greater flexibility and competition to the rate regulatory system. The state should also give citizens a full voice in the process by providing standing to the public at rate hearings, as in other lines of insurance, and allowing them the right to request a rate hearing be held.
Senator Kelly Hancock (R) and Representative Sergio Muñoz (D) have filed legislation to once again give consumers a voice in title insurance rate-setting hearings. Under current statute, title insurance companies can ask the Texas Department of Insurance for a hearing if they think rates are too low, but consumers – home buyers, realtors, builders and anyone other than title insurance companies – are prevented from asking for a hearing if they believe title insurance rates are too high. Both bills will give consumers a voice in the process and allow them to fully participate by providing standing to appear, offer evidence at hearings, and to request a hearing be held to consider a rate change more frequently than five years.