Colorado Sees Significant Enforcement Action for Title Industry in 2010

In its annual report on title insurance, Colorado’s Commissioner of Insurance revealed that the state is currently conducting an investigation into payment of referral fees and inducements for referrals in the title insurance industry, and anticipates that the investigation will yield “significant enforcement actions” in 2010.

The title industry in Colorado, like in many other states, has seen big changes in recent years.  Colorado has seen the number of title agency licenses drop by half since 2004, from 715 to 356.  Title insurance premiums in the state have suffered an even sharper decline, plummeting from $334 million a year in 2005 to a $141 million a year annual rate in 2009.   In 2008, Mercury Companies Inc., a significant operator of title insurance companies in Colorado, filed for bankruptcy and sold its Colorado title operations to Fidelity Courtesy of Source of Title.

Colorado’s Department of Insurance has been active in past years regarding enforcement of state prohibitions of kickback payments for referral of title insurance business.  In 2005, the state shut down took enforcement action to shut down 11 title agencies for paying for referrals, and promised to shut down an additional 180 sham title businesses.  The state took seven formal enforcement actions in 2009.

Colorado’s annual report on title insurance can be viewed here.