AfBA Title Insurance saves consumers money with low overhead and 10 year reissue rates

BrokerIPTV: Today, we are talking with John Clikeman managing partner of AfBA Meridian Title and Escrow and John, welcome to the show.

John Clikeman: Thank you.

BrokerIPTV: Glad you are here.

John Clikeman: Nice to be here.

BrokerIPTV: Now you operate one of the larger real estate broker owned AfBA title insurance companies in Colorado, Meridian Title and Escrow Talk a little bit about that.

John Clikeman: Well, an Affiliated Business Arrangements AfBAis basically a concept where the broker owners of the real estate office or real estate broker become actual owners in the title insurance entity and therefore, are able to refer business to their, in effect their own company and of course, but subject to all the RESPA and Colorado insurance and real estate requirements, disclosure requirements, etc., but it is basically a vehicle for members of the real estate community to in effect create some additional corollary income in the real estate pursuits.<watch video>

BrokerIPTV: Now, this obviously has worked out fairly well for you?

John Clikeman: So far so good. It is a little slow right now; we would like it faster, but...

BrokerIPTV: You are right.

John Clikeman: We are living through it.

BrokerIPTV: Yeah. Now, are you seeing an increase in AfBA membership?

John Clikeman: We are. I think that has got something to do with the fact that the market is changing and I think the Realtors® are looking for different things to be able to offer to their customers, i.e., the one stop shop concept and also to be more conscious of how they can deal with the consumer on a more consumer friendly basis; that pertains a lot to the title insurance rate structures.

BrokerIPTV: I am glad you brought that up, because obviously you have got an advantage if it is all housed internally and it's real estate broker owned and you obviously don't have some of the overhead costs that other title insurance companies have and therefore, you can pass that onto the consumer, correct?

John Clikeman: Yes, that is part of the benefit. So, we try to keep the overhead factors comparatively very low. There is not a lot of brick and motor issues. There is... our owners are really the sales force for the company. So, we don't have extra overhead to go out and buy... not buy, but to bring in a sales force as such; we have a built in sales force.

BrokerIPTV: Right. I don't think people know, but how wide of a... or how wide of a range can there be in title insurance costs?

John Clikeman: It can be pretty dramatic when you get into talking what we call reissue rates. Say some companies and these are the underwriters that have the rates filed with the Division of Insurance, but some reissue rates go back as little as two years, some go back three years on a tiered basis. There are underwriters out there that go back six years and then there is also I believe one underwriter in Colorado that goes back actually 10 years on a reissue rate and we, fortunately for Meridian Title and Escrow, have three separate underwriters at this point and we do have the ability to offer that ten year reissue rate. For instance, if you have a title premium that would normally be $2000 on a transaction and it doesn't come into that ten year reissue rate time period, that's what you are going to pay. If you do have one that comes within that time frame or goes back that far, you are going to pay a $1000. So, you have a basic 50% savings, which can be significant in a real estate transaction.

BrokerIPTV: Final question; Department of Real Estate every year, beginning a new year, we have got new rules, we have got regs[Phonetic], we have got changes to the contract. Disclosures are going to be big again this year. They are really trying to spell out the broker duties with the disclosures and they are really trying to tell the consumer what?

John Clikeman: Well, it looks like where they are going with all this is they want the consumer to be more educated and knowledgeable about the rates, fees, the new RESPA rule was just put into place, that was intended to simplify the process; I am not quite sure it is doing that, but they want the consumer to be more, I would call it, educated in what they are really getting into. Frankly, I am not sure the consumer does understand title insurance all that well, but at least on a rate structure, the goal there is to get people to understand what their options are and do some comparisons.

BrokerIPTV: And they really want to make it clear that agents do not shop around for rates on behalf of the client. John, thanks so much.

John Clikeman: Thank you.

BrokerIPTV: Appreciate you being with us.

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Posted on November 30, 2008 15:32:16 by Blog Author