Title insurance agents in New York will soon be required to register with the state, meet qualification standards and undergo regular training as part of the state’s new licensing process.
The licensing requirement was included as part of the New York state budget passed on April 1. New York was previously one of three states in the country that did not require its title insurance agents to be licensed.
The budget gives the state’s Department of Financial Services the authority to license the state’s title agents. The DFS will also have the authority to monitor abuse by agents and to revoke licenses accordingly.
The department already licenses the state’s other insurance agents and brokers.
The law will go into effect on September 29, which is 180 days after the law was signed. Title agents will be required to renew their license every two years, and complete 15 hours of continuing education during their two-year licensing period.
The new regulations were met with approval by the New York State Land Title Association, which represents a statewide network of 10 insurance corporations and nearly 300 small businesses, employing more than 10,000 people in New York.
“Title agents and their underwriters are instrumental in virtually every real estate transaction that takes place in New York State,” said Michael Berey, president of NYSLTA. “Today we have bolstered consumer protections, established well-defined competency standards, and created a regulatory environment that will provide greater transparency.”
In addition to the title insurance reforms, New York Governor Andrew Cuomo’s office also announced that the DFS will be issuing additional regulations for title insurance agents.
The Cuomo administration expects these reforms and regulations to result in a 20% reduction in title insurance premiums and closing costs for new home purchases and more than a 60% reduction in costs on refinancing transactions.
The typical one-time cost of a title insurance policy for the owners of a $200,000 property ranges from $1,029 in metropolitan New York and its suburbs to $952 in upstate New York. The NYSLTA estimates that nearly 450,000 title insurance policies were issued in New York in 2012.
Lowering costs appears to be the new modus operandi for title insurance. The emergence of direct-to-consumer title insurance websites has increased the consumer’s awareness of this once-overlooked portion of the home-buying process. The websites tout lower costs and encourage consumers to be more involved throughout the closing process.
Once the new regulations take effect in New York, the state’s residents will be able to choose between the web’s low costs and licensed title insurance agents touting lower costs of their own. May the best insurer win.