In New Zealand, some underwriters are reporting an increase in the uptake of title insurance. However, they say educating property market stakeholders about the coverage, including insurance brokers, can still be challenging.
“There’s been a steady increase in uptake and awareness about the product,” said Chris Hammond (pictured), head of title insurance across APAC for DUAL, the global specialist underwriting agency.
Hammond said local title insurance providers have “done a great job” raising awareness about this insurance and its utility. However, he said the coverage is not universally well understood, particularly outside the legal and conveyancing professions.
The offering also suffers, he suggested, from not being among a broker’s main arsenal of offerings. Much like cyber insurance, one challenge for a broker with cash strapped SME clients can be how to bring it up in conversation when it can already be a hard sell getting the main business coverage over the line.
“We are finding that, among insurance brokers, it's not always front of mind as it's a niche legal-risk product, not a standard general insurance policy,” said Hammond. “Education continues to be a challenge, particularly around what title insurance covers compared to a building or home insurance policy.”
This challenge is more complicated than just low product awareness among consumers and brokers.
Hammond said this effort needs to involve distinguishing title insurance from traditional home or building insurance. He said his firm’s outreach efforts with brokers and other stakeholders include educating the market about how title insurance complements the existing land title registration systems in New Zealand and Australia. “Educating the market that title insurance policies cover more than just pure title/ownership claims and can cover certain legal matters that impact on use of real estate as well,” said Hammond.
Title insurance, he said, is “a great risk mitigation tool” when a client is involved in a property transaction where due diligence is inhibited by the sale’s timing or a short settlement timeframe.
Also, he said, it can be useful in distressed property transactions, where sellers may be unwilling or unable to give meaningful warranties. Portfolio transactions, said Hammond, are another scenario where this cover can overcome risks around the impracticality of conducting full diligence on every property.
In the commercial real estate sector, Hammond said this coverage is most relevant to:
According to Hammond, in simple terms, title insurance is a one-off purchase that protects property buyers from problems with the legal ownership – also known as legal title – or use of their land.
This 'one-off premium' insurance, he said, is bought at the time of purchasing, developing or lending against property. “It protects the insured for as long as they own, or have an interest in, the property,” said Hammond.
Covered risks include:
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