Title insurance provides protection against financial loss due to defects in a property title. Unlike many other property and casualty (P&C) insurance policies, where premiums are collected annually or biannually, title insurance is a one-time purchase at the time the home is acquired or refinanced, and losses can be reported for 20 or more years. It is more expense-driven, with most of its premium spent prior to the policy being written.
Because title insurance is expense-driven, insurtech firms seeking entry into this insurance line should focus on lowering expense ratios instead of loss ratios. Insurtechs have only recently begun to affect the title industry. This presents unique opportunities for new and established insurers in the title space to innovate and gain market share.
In this article, Milliman’s Anne Kallfisch and Dana Ryan consider the effects that insurtech firms have had on the P&C insurance industry and whether or not those efforts have translated to title insurance. They also discuss the opportunities available to insurtechs within the title insurance sector.