New York Codes, Rules and Regulations
Title 11 - INSURANCE
Chapter IX - Unfair Trade Practices
Part 228 - TITLE INSURANCE RATES, EXPENSES AND CHARGES
Section 228.0 - Scope and purpose

(a) Following examinations, investigations and analysis relating to the title insurance industry, the Department of Financial Services ("Department") has identified concerns regarding certain practices that impact consumers and result in higher premiums and closing costs, including those that violate Insurance Law section 6409(d). This regulation thus addresses such practices and provides specific requirements. Consumers of title insurance usually rely upon the advice of real estate professionals, including attorneys or real estate agents, who order the policy on their behalf. Consumers also typically pay any invoice presented at the closing without seeking documentation or further clarification. The Department seeks to protect consumers from unnecessary costs stemming from practices that violate the Insurance Law.

(b) The Department's investigation of the title insurance industry found that each year millions of dollars are spent by title insurance corporations and title insurance agents, which the industry has termed "marketing costs", provided to attorneys and other real estate professionals involved in the purchase of title insurance to induce title insurance business, examples of which include meals, entertainment, gifts, vacations, and free classes to select individuals. These expenses are included in the calculation of future rates.

(c) The Department's investigation of the title insurance industry further found that certain title insurance agents and title insurance corporations mark up ancillary charges excessively.

(d) The Department's investigation further found that consumers are often encouraged at the closing to pay gratuities and required to pay pick-up fees to title insurance closers. These charges are often not disclosed to the consumer before the closing, and the consumer has no option but to pay the amount changed.

(e) The purpose of this Part is to promote the public welfare by proscribing practices that are not in accordance with Insurance Law section 2303, which provides that insurance rates shall not be excessive, inadequate, or unfairly discriminatory. This Part also provides standards for the title insurance industry with regard to the types of expenses the Superintendent finds appropriate with regard to Insurance Law section 6409(d), which prohibits giving any consideration or valuable thing as an inducement for title insurance business, Insurance Law section 6409(e), which states that title insurance premiums shall reflect the anti-inducement prohibition of Insurance Law section 6409(d) as well as other Insurance Law and Financial Services Law provisions that authorize the superintendent to regulate market conduct in the title insurance industry.

(f) This Part further protects consumers, pursuant to the authority of Insurance Law sections 2110 and 2119 and article 24 and Financial Services Law sections 301 and 302, by ensuring that the title insurance industry provides valuable products and services to consumers at reasonable rates and fees and does not overcharge consumers or charge improper or excessive fees that constitute engaging in unfair and deceptive acts and practices.