ALTA FEDERAL CONFERENCE

1
ALTA FEDERAL CONFERENCE
March 7-8, 2006 Washington, D.C.
2
OVERVIEW

• Identify current climate, key issues and
  opportunities
• Provide a set of messages members can use
• Ensure that we are all forwarding positive,
  consistent messages

3
CURRENT CLIMATE

• Reinsurance issue in 2005
• Birnbaum report in California
• Colorado DOI investigation into ABAs
• Agent defalcations (CO, NY)
• U.S. Rep. Michael Oxleys letter to the GAO

4
KEY ISSUES MISPERCEPTIONS

• Title insurance costs too much
• Claims are low compared to other lines of
  insurance, so you are overcharging
• There is a lack of competition in the title
  industry, keeping costs high
• Technology should lower prices
• Monoline restrictions keep competitors out of the
  market
• Iowa has a better title insurance system
• The title industry has engaged in bad conduct

5
KEY ISSUES MISPERCEPTIONS

• There may also be questions raised about
• The GAO Study
• RESPA Reform
• Federal Regulation of Insurance

6
OPPORTUNITIES

• Educate our audiences about title insurance.
• Clear up the misinformation and confusion.
• Communicate the value and benefits of this
  important protection.

7
TOP 10 MISPERCEPTIONS QUESTIONS
8
1 COST

• Some have criticized the cost for title
  insurance. Are premiums in line with the value of
  the product?
• A one-time premium covers the life of a loan
  and/or property ownership. For the price, its a
  bargain.
• Rates are heavily regulated.
• Rates must ensure reserves and solvency of
  insurers.

9
2 CLAIMS

• Why do title insurers only pay 5 of premiums in
  claims when property and casualty companies pay
  70? Arent you gouging consumers to increase
  your profits?
• Title insurance is based on loss prevention
  rather than loss assumption. The majority of our
  costs are on the front end.
• Our expenses total 90 of the premium dollar
  compared to PC companies at approximately 25.

10
3 COMPETITION

• When closing services are largely selected by
  disinterested third parties (i.e. real estate and
  mortgage professionals), doesnt that foster a
  non-competitive atmosphere, at least in terms of
  price?
• In truth, consumers choose not to get involved in
  the process.
• Title companies compete fiercely for business
  with third-parties.
• Consumers should be helped to understand why they
  need this important protection.
• ALTAs Web site has information to help consumers
  make informed decisions.

11
4 TECHNOLOGY

• Havent advances in technology made it easier to
  do a title search, and shouldnt prices reflect
  that?
• Title searches are not like a Google search.
• Only 10-15 of counties have automated title
  files.
• Most rely on manual searches of paper-based
  archives.
• Counties dont have the budget to automate title
  data.
• Private title plants are expanding, but
  represent a considerable cost.

12
5 MONOLINE

• What are monoline restrictions, and are they
  still applicable today? Dont they prevent
  competitors from entering the market, which would
  lower prices?
• Monoline restricts companies writing certain
  high-risk lines of insurance to writing only
  those lines.
• Monoline ensures the reserves and solvency of
  insurers for the protection of policyholders.
• Non-title insurers lack appropriate reserves and
  underwriting experience for title insurance.

13
6 IOWA SYSTEM

• Iowas system of title insurance is run by the
  state. Why havent other states followed Iowas
  example?
• Most Iowa mortgages are insured out of state.
• Only half of title losses are covered by Iowa
  system.
• As a government-run monopoly, there is no
  competitive incentive to keep pace with markets
  and consumer needs.

14
7 INDUSTRY CONDUCT

• We keep hearing about agent defalcations,
  kickbacks, and regulatory actions being taken
  against title companies. Is this an
  industry-wide problem?
• Every industry has its share of bad apples and
  fraudulent activity.
• Fraudulent practices should be prosecuted to the
  full extent of the law.
• ALTA supports practices that are compliant with
  the laws and regulations governing the title
  industry.

15
8 GAO

• Why is the GAO looking into the title industry?
• The complexity of our business has created
  misinformation and misunderstanding about title
  insurance.
• ALTA met with and is assisting the GAO fully.
• We view this as an opportunity to clear up the
  confusion that exists in the marketplace.

16
9 RESPA REFORM

• Does the title industry support RESPA reform, and
  how will that impact your business?
• ALTA supports HUDs efforts to make the home
  buying process more transparent for consumers.
• ALTA actively participated in all HUD-sponsored
  workshops last year.
• It is unknown when HUD might publish a proposed
  rule, or what that rule might include.

17
10 FEDERAL REGULATION OF INSURANCE

• What about regulating title insurance at the
  federal level. Will that work?
• No.
• Title insurance is very tied to local customs and
  laws.
• It represents an enormous undertaking to
  establish federal regulations that reflect
  variations in all 50 states.
• State regulators can respond to the local
  marketplace more quickly.

18
OPPORTUNITIES AND TOOLS
19
UPCOMING OPPORTUNITIES

• National Homeownership Month June 2006
• Proclamation by President Bush
• Supported by HUD Workshops throughout
• the country

20
HOMEOWNERSHIP MONTH

• Presidential Proclamation

From the earliest days of our Nation,
homeownership has embodied the core American
values of individual freedom, personal
responsibility and self-reliance. Homeownership
is also a bedrock of the American economy,
helping to increase jobs, boost demand for goods
and services, and build prosperity.
21
HOMEOWNERSHIP MONTH

• The Title Industry

For 125 years, the title industry has protected
the American dream of homeownership. The land
records and title insurance system in the U.S.
allows people to secure loans on real estate to
build, be entrepreneurial, create jobs, and grow
our economy.
22
HOMEOWNERSHIP MONTH

• Opportunities for Local Involvement
• Find out whats happening in your community.
• Initiate a proclamation by your local government.
• Sponsor a booth at a local fair.
• Give a presentation to a local civic group.
• Place an ad and/or article in your local
  newspaper.
• Participate in a Habitat for Humanity project.

23
TITLE INDUSTRYMARKETING KIT

• Promote your business while forwarding our value
  proposition
• New addition Member Article Library
• (look for article on NHM in May)

24
QUESTIONS AND ANSWERS