FTC Says 6 Title Insurers Fixed Prices : 3 Southland Firms Among Those Cited in Trade Restraint Case
The Federal Trade Commission charged Monday that six major title insurance firms, including three Southland companies, illegally fixed prices on title searches and examinations and on settlement services in 13 states.
The commission charged that the companies used private ratings bureaus to fix prices for services provided by the insurance firms to real estate purchasers, thus restraining competition in this business.
The complaint named Ticor Title Insurance Co. of Los Angeles; Chicago Title Insurance Co., Chicago; Safeco Title Insurance Co., Los Angeles; First American Title Insurance Co., Santa Ana; Lawyers Title Insurance Co., Richmond, Va., and Stewart Title Guarantee Co., Galveston, Tex.
The complaint charged that the price-fixing violations occurred in Arizona, Connecticut, Idaho, Louisiana, Montana, New Jersey, New Mexico, New York, Ohio, Oregon, Pennsylvania, Wisconsin and Wyoming.
Title insurance protects property owners from any prior claims that may exist against real estate they buy. Before the insurance is issued, the firms conduct a title search to make sure the seller has clear title to the property.
The ratings bureaus unlawfully fixed fees for those searches, the commission charged, and also for other services provided at property settlements.
The complaint does not concern sales of title insurance itself, as the FTC is banned by law from investigating or regulating the insurance industry. However, the commission concluded that title search and examinations and settlement assistance provided by the firms are not actually part of the insurance business and so could face scrutiny by the commission.
Frank Tatum Jr., an attorney representing First American, argued in a telephone interview that the FTC was wrong in making the charges because numerous court cases had established that the search and examination of titles is part of the insurance business and therefore exempt from FTC supervision.
“How can you issue a title insurance policy unless you know what the state of the policy is?” he asked.
Winston V. Morrow, chairman and chief executive of Ticor, called the charges “ridiculous.” He charged that the commission was trying to “make some new law.”
“We have acted in accordance with state laws and practices . . . and in the absolute confidence that our activity is specifically exempted,” he said.
Bill Little, chairman of Safeco Title, said he would not comment until he had seen the FTC complaint.
According to the FTC staff, the six firms accounted for more than half of the title insurance business nationwide in 1983, with more than $900 million in direct premiums written.
