LandAmerica also agreed to reimburse the division's investigative costs of $15,000.

The settlement was announced yesterday and is part of a nationwide probe by state insurance regulators of alleged illegal rebates and referral fees in the title insurance industry.

LandAmerica does business in Colorado as Commonwealth Land Title, Lawyers Title and Transnation Title, and is the state's second largest title insurer.

According to the Division of Insurance, LandAmerica participated in captive reinsurance arrangements where Citigroup and Ryland Home subsidiaries or affiliates agreed to refer all of their refinance and new home sale business to LandAmerica, provided the business was “reinsured” with a reinsurance entity established for or by the lender or homebuilder.

In a statement announcing the settlement, the division said it “contends the reinsurance entities were established to serve as vehicles for providing kickbacks for the lender and homebuilder's referral business.” It noted that “kickbacks for referral of title insurance business are prohibited under state and federal law.”

The Colorado Division of Insurance has been probing captive reinsurance arrangements since late 2004. It issued a cease and desist order requiring LandAmerica to stop entering into the agreements with homebuilders and lenders in March 2005.

In early 2005, the agency reached settlements with two other companies accused of entering into these practices, First American and Fidelity National, totaling more than $26 million. Unlike the previous settlements, the LandAmerica settlement concerns Colorado only and is not a multistate agreement.

The division said its records show that LandAmerica started the practices about 10 years ago, and the other companies followed suit several years later.

According to Colorado Insurance Commissioner David Rivera, the arrangements may have affected the level of competition in the marketplace by creating entry barriers for smaller title companies.

The Colorado probe has attracted national interest because Erin Toll, the division's deputy commissioner, heads the National Association of Insurance Commissioners' task force on title insurance and testified before the House Financial Services Committee in April in that capacity.

A month later, the panel sent a letter requesting documents and records from LandAmerica regarding its allegations that Ms. Toll has a conflict of interest, that the state probe “is based on a false premise,” and that she should recuse herself from the Colorado investigation.

Mr. Rivera, however, said he found no basis for such claims and declined to remove Ms. Toll from the case.

Ms. Toll, according to her testimony, began investigated nine Colorado title insurers for alleged kickback schemes that resulted in overcharges to consumers for title insurance services.

Her probe prompted a number of states to launch similar probes, including New York, Florida, Washington, Hawaii, California, Oklahoma and Minnesota.