Title Insurance companies in Wisconsin have started to notify their customers of substantial increases in title policy premiums, commencing as early as October 1, 2012. Title insurers are filing new rate sheets with the Wisconsin Commissioner of Insurance and are suggesting the rates on the sheet are not likely to be the subject of negotiation. Title insurers cite a recent Bulletin issued by the Office of the Commissioner of Insurance (OCI) as the basis for this new posture. It is important to understand that the Bulletin itself does not change long standing rules that allow title insurers to charge “Downward Deviated” Rates. Nevertheless, title insurers describe the Bulletin as restricting negotiated competitive rates.   

The State of Wisconsin regulates all insurance companies who sell insurance products to parties within this State, and title insurance is only one of those products. However, title insurance is substantially different from health or property insurance. A title insurance policy guarantees the status of the ownership and liens on land on the date of purchase of the land or date of the mortgage, and that policy coverage continues generally, as long as that owner owns that land, or that mortgage is outstanding. Title policies typically are priced on a “per thousand” rate, depending on the value of the land or loan being insured.

Wisconsin has always technically had filed rates for title insurance, but OCI rules have permitted competition between title companies with “downward deviations” in those rates, in most commercial deals. Policies on large commercial transactions might only cost between $.50 to $1.00 per thousand dollars of insured coverage, depending on the risks, with each title company negotiating their rates with the purchasers of those policies, which produced true market competition.

At least one major title company has already filed its new rate schedule, and has informed its customers that all orders placed after October 1, 2012, will be charged these rates, citing the OCI Bulletin. Other companies are filing as they see fit, but most intend to file early this fall.

The rates which have been filed so far reflect a large increase in title premiums, over rates currently charged, at least in the Milwaukee and Madison markets. Charges for individual endorsements, which have risen substantially in recent years, appear to be staying at their high level. Because of the consolidation of title underwriters in the last few years, to only a handful of companies, filings by one underwriter fix those rates for multiple title agencies throughout the State.

This change will create a substantial increase in costs for parties in Southeastern
Wisconsin, who are in the business of purchasing or selling land, or making loans on that property.