Financial analysis firm Demotech has concluded that US title underwriters are financially healthy and possess the means to address time gaps in coverage associated with the closing or limited hours of county recorder offices.
Few businesses are operating at full capacity as a result of precautionary efforts to mitigate the spread of coronavirus.
Despite this, Demotech says the title insurance industry has had in place, for decades, procedures and practices to mitigate purchaser and lender exposure associated with unknown title matters emerging in the period subsequent to examination of title.
“Gaps in protection are unavoidable. Backlogs at recorder offices and intervening matters subsequent to a search include the time commitment to process, record or index information,” said Joseph Petrelli, President and co-founder of Demotech.
“The effort to mitigate the spread of COVID-19 and the resultant closings or limited hours at recorder offices has exacerbated the situation; however, this industry is well-positioned and possesses the capability to address gaps.”
Douglas Powell, Senior Financial Analyst at Demotech, added, “During the temporary COVID-19 restrictions, the practical protection available to stakeholders is gap coverage at the transaction level.
“Gap insurance practices vary by state, size of transaction, and the parties involved. Given that the professionals focused on finding and addressing matters impacting title to real property may be unable to discover all matters of record, there may be an additional premium associated with gap coverage.”
Paul Osborne, Senior Consultant at Demotech, and Editor-in-Chief of Demotech Performance of Title Insurance Companies, commented, “A Title underwriter’s response to consumers and lenders is a financial commitment as well as the vetting of the marketability of title.
“With more than $11 billion in net admitted assets and more than $5.6 billion of statutory net worth at year-end 2019, Title underwriters are positioned to address the needs of the property owners as well as any stakeholders that might rely on that real property as collateral.”
