February 03, 2017
OneTitle slashes title insurance rates
By E.B. Solomont on TheRealDeal.com
NY underwriters historically set prices together
In an industry dominated by large players, upstart title insurance company OneTitle received approval from state regulators to slash its rates, the company told The Real Deal.Underwriters in New York — whose prices are regulated by the state — typically file rates together, resulting in a lack of competitive pricing. But OneTitle CEO Daniel Price said the state’s Department of Financial Services approved OneTitle’s 25 percent rate reduction on deals exceeding $15 million.
The takeaway? Someone who buys a $50 million condominium could purchase a policy from OneTitle for $77,597, according to OneTitle’s rate calculator, compared with competitors who would charge $103,920. For a $350 million construction loan, OneTitle would charge $730,000 compared to an estimated $976,000.
Price said OneTitle’s new rate would result in a “substantial delta” of savings for buyers. “It doesn’t matter for us whether you’re talking about a $20 million transaction or a $200 million transaction. Our premium will be 25 percent less,” he said.
Title insurance, the dry-but-critical element of all real estate deals, was thrust into the spotlight last year when the U.S. Treasury Department — in a bid to crack down on illicit funds flowing into the U.S. through real estate deals— said underwriters would be required to disclose the identities of cash buyers using LLCs to buy homes over $3 million in Manhattan. (The Department later expanded the ruling to several other real estate markets.)
Title insurance represents an opaque corner of real estate, as The Real Deal found in an in-depth investigation last year.
Since 1993, underwriters in New York have worked together to set rates for the industry. Few companies file their own rates, except for OneTitle, which launched in 2014.
The venture-backed underwriter has raised $17 million to date, including $13 million from White Mountains Insurance Group, a publicly-traded underwriter headquartered in New Hampshire.
In addition to the lower rates, OneTitle recently launched a free library of condo offering plans, Price said.