If a title company overcharged customers for title insurance, what might be an appropriate penalty? My thought would be that if there was clear overcharging, forcing the offending company to refund the customers the amount of the overcharge would be appropriate.  If the overcharge was less blatant, a simple fine might suffice.  If no overcharge was apparent, then there should be no penalty at all, of course.

In Indiana however, the penalty for overcharging customers appears to be that the government will help the offending company win repeat business:

Indiana Department of Insurance (IDOI) Commissioner Stephen W. Robertson announced on June 22 a regulatory settlement with Stewart Title Guaranty Company that could provide discounts to up to 173,900 consumers over the next three years.


The Department has been investigating title insurance companies doing
business in Indiana for overcharging home buyers when title insurance
was purchased.  Consumers should check with their title insurance agent to find out more.

This is the first resolution with any of the title insurance companies and provides an additional 15-percent discount to previous customers of Stewart Title.  Customers who purchased title insurance from Stewart for a residential purchase or refinance during the last ten years will be eligible for the discount for future title insurance policies. 

Yep that’s right– if you were overcharged by Stewart for title insurance in Indiana, your remedy is to get it back next time from Stewart, via a government-administered discount program.

The insurance commissioner touts this settlement as a win for overcharged consumers:

“It was the Department’s due diligence and Stewart’s willingness to come to the table, discuss the scope of the issue, and reach a resolution that made it possible for a timely and fair settlement for thousands of Hoosiers who previously purchased title insurance from Stewart.” said Robertson. 

How could this settlement possibly be fair for consumers?  Either they were overcharged or they weren’t.  If they were overcharged, the only fair thing would be for them to get a refund.  If they were not overcharged, they aren’t entitled to anything.  As it stands now, the only way to get any remedy at all from a company that allegedly overcharged you is to do more business with that company!  (And this leaves aside the fact that unless an affected consumer plans to buy real estate in the next three years, this settlement provides no remedy at all.)


I’m imagining former Stewart customers shopping for title insurance before and after this settlement–

Before the settlement:

“Title insurance?  I don’t care, whoever you think is best is fine with me.”


“I want anybody but Stewart for title insurance.  They overcharged me last time.”


After the settlement:

“I gotta go with Stewart.  I get a 15% discount.”


So how exactly is this a penalty for Stewart?  If I was Stewart’s competitors, I wouldn’t be too happy about this settlement.  Stewart now has an edge in garnering repeat business from these 173,900 customers, thanks to the government running a de facto promotion for them. 

On the other hand, Stewart’s competitors will likely be rushing to the settlement table to reach similar agreements.