North America

Outlook bleak for title insurers

The significant slowdown in the housing market and increased claims activity from higher home foreclosures means that, within the US industry, title insurers are among the hardest hit. Indeed, according to a special report by rating agency AM Best, deterioration in the revenues and profitability of the title insurance sector in 2007 and the first half 2008 is likely to accelerate in the second half of 2008. The agency said that any improvement in the sector’s profitability will depend largely on the length and depth of the housing downturn, the availability of credit and the ability of title insurers to aggressively reduce expenses in alignment with the decreased revenue levels. In 2007, the title insurance sector’s combined ratio, at 100.6%, became unprofitable for the first time in 17 years, with the industry experiencing an $84.5mn underwriting loss.