Colorado was the first state last month to disclose what officials said was a rampant pattern of title insurers paying kickbacks to developers and mortgage companies that referred business to them.

According to regulators, the kickbacks took the form of premium payments for reinsurance that the title insurers bought from captives operated by the firms that sent them business. The reinsurance was for business that involved virtually no risk, regulators contend.

While some regulators say such deals raise the price of title insurance for all consumers, the insurers themselves and builders say the payments are legal.

An overflow crowd attended last Monday's NAIC meeting of the Title Insurance Working Group in which Colorado Deputy Commissioner Erin Toll delivered a report on investigations by state insurance regulators and attorneys general.

Florida Commissioner Kevin McCarty noted that the title industrys loss ratio is 8 percent. Mr. Wagner said that perhaps an overhaul of the entire industry is in order, but could not specify how such actions would stop allegedly corrupt practices that are said to have infiltrated the industry.

Reproduced from National Underwriter Edition, March 17, 2005. Copyright 2005 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.