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The American Land Title Association (ALTA) reports that title fraud and forgery claims have increased by 20% since 2013, now constituting 20% of all insurance claims over the past decade. This surge in fraud has cost title insurers $4.4 billion in losses and expenses for policies written between 2013 and 2022. On average, fraud and forgery claims are significantly more expensive, costing title insurers over $143,000 per case, compared to an average of $26,328 for other claim types. A study commissioned by ALTA and conducted by Milliman also found that 30% of all title losses and claims expenses could not be detected through public records searches.
Title Industry Group ALTA Claims Title Fraud Cases Have Increased By 20% Since 2013 Costing Insurers $4.4 Billion
ALTA is reporting title fraud and forgery claims make up 20% of all insurance claims over the past decade. ALTA aka the American Land Title Association refers to a study they commissioned by Milliman.
Title insurers recorded 203,181 claims for policies written during 2013-2022. Title insurers also paid out $4.4 billion in claims related to losses and loss expenses.
The costs associated with fraud related claims represent 21% of that total. On average, fraud and forgery claims cost title insurers more than $143,000 per case. All other claims cost an average of $26,328.
The study examined 127,000 claims associated with policies issued between 2013 and 2022.
The analysis divided claim types into 11 categories. The most common category was “basic risk.”
This category accounted for 24% of all claims. It included things like fraud, forgery, undisclosed heirs, marital rights and competency.
Other categories included “special risks” which made up 13.7% of all claims. These include things like mechanics’ liens and subordination of underwritten risks. In addition to escrow and closing procedures.
What other types of claims are included in ALTA's report, and why are some title losses difficult to uncover?
ALTA's report includes various other claims such as improper instructions, improper payments, failure to make payments, and incomplete post-closing responsibilities, in addition to non-covered claims, title company claims, taxes, and special assessments. Some title losses are difficult to uncover because Milliman found that 30% of all title losses and claims expenses could not be identified through public records searches. Fraud and forgery claims, which are among the costliest expenses for title firms, are also on the rise, representing 19% of all claims between 2013 and 2020, and rising to 44% in 2022 alone.
The rest of the analyzed claims were either apparent non-covered claims or title company claims. In addition to taxes and special assessment claims.
In addition to being the costliest expenses for title firms, fraud and forgery claims are also on the rise. Between 2013 and 2020, they represented 19% of all claims between 2013 and 2020. The report also states that insurance claims rose to 44% in 2022 alone.
Milliman found that 30% of all title losses and claims expenses could not be uncovered by a public records searches.
