The American Land Title Association saw a nearly 36% year-over-year increase in title insurance premium volume in 2021 for a staggering $7 billion spike, according to the trade group’s Market Share Analysis, published Friday.
The title insurance industry generated $26.2 billion in premiums last year compared to $19.2 billion in 2020, an increase that ALTA attributed to historic mortgage origination activity and the substantial increase in home values. Despite such explosive increases during those years, the focus in early 2022 seems to be how long it will last and to what extent title insurance premiums might normalize under radically changing economic conditions.
“Incredibly low mortgage rates (led) to an unprecedented increase in real estate transactions and substantially higher home values,” Diane Tomb, the CEO of ALTA said in a statement. “Those factors — caused in part by the unique circumstances of the COVID-19 pandemic — contributed to the record title insurance premium volume, which the title industry won’t see again soon. The majority of title professionals were busier in 2021 than they ever have been.”
The five states with the largest year-over-year increases in title premium volume in 2021 were Florida (52.1%), New York (42.8%), Pennsylvania (42.2%), Texas (39.5%) and California (24.6%). The same five states held the top spots during the third quarter of 2021.
Of those top states, Texas generated the largest volume of title premiums, with more than $3.5 billion.
Total operating income for the industry was up 33.4% in the third quarter compared to a year prior, though operating expenses were also up 32%. Loss and loss adjustment expenses were up 2.3% year-over-year. Overall, title underwriters paid out almost $475 million in claims for the year.
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Top underwriters by market share for the year included First American Title insurance Co., with 20.5%; Old Republic National Title Insurance Co., with 14.8%; Chicago Title Insurance Co., with 14%; Fidelity National Title Insurance, with 13.5%; and Stewart Title Guaranty Co., with 8.9%.
However, it should be noted that Chicago Title is part of Fidelity. And with almost 34% of the market, it ended 2020 as the largest company by share of premiums written.
Also at the close of 2020, First American’s market share was 23.3%, while Old Republic’s was 15% and Stewart’s was 9.6%. Stewart — which finished 2021 on a bit of an acquisition spree —has been looking to reclaim some of the title premium it lost in recent years. As recently as 2019, Stewart’s market share was 10.62%.
Rounding out the top 10 for 2021, Westcor Land Title Insurance Co. maintained 5.9% of the market, good for sixth place. Commonwealth Land Title Insurance Co. had 4.1% of the market share, WFG National Title Insurance Co. had 2.8%, Title Resources Guaranty Co. had 2.4% and Doma Title Insurance Co., helmed by Max Simkoff, held 1.9%.
This is an impressive feat as Simkoff’s company has thus far failed to report a profitable quarter.
Although the “Big Four” still command the overwhelming majority of the market with a combined market share of 71.1%, their collective grip could be slipping. In 2019, independent title underwriters such as Westcor, WFG and others, had a combined market share just shy of 15%.
According to ALTA, the cost of title insurance coverage has decreased 7% since 2004, meaning for each dollar of premium a consumer purchases, they get an extra $26 in coverage, comparatively.
There’s no denying 2021 was a strong year for title insurers and underwriters. But as housing inventory remains scant, refinance volume continues its steady decline due to rising mortgage rates and prices continue to soar, pricing additional homebuyers out of the market, it’s safe to say the title industry faces an uphill battle in 2022.
