Ensure the Insurer
May 6, 2011 6:15 PM   Subscribe

How can I branch out my title insurance company to survive this economy?

My husband has a small title insurance company in the DC area. It's been successful through ups and downs over the past 10 years, but the current economy has been quite brutal, and things aren't looking up, even as the "worst" of the economy is theoretically behind us. He's hoping this dry spell is just a phase, but he thinks he needs to branch out the business to help ride it out or make it flourish in more directions for the longer term.

I've brought his concerns to mefi hoping for some ideas for directions that are a natural (or even unusual) extension of title insurance/real estate settlements so that he can keep his company alive. For example, should he get a license in property/casualty insurance and sell homeowners and auto insurance as well? He's got a scrappy and sharp staff of 2 other employees (who he can potentially get more training for) and a lawyer he works with (peripherally), but my husband himself is not an attorney.

posted by rabidsegue to Work & Money (3 answers total)
Homeowners insurance does seem to be an obvious add-on sale to people buying title insurance.

Also, does he just sell the title insurance or does he have any involvement in the title search process? If it's not too difficult to get into the latter, there are a *LOT* of people and companies who need help sorting out title problems on properties they already bought, since so many bank owners of foreclosed homes and the title search companies they employ are really fucking things up lately.

For example, when we bought our home from a bank, we found out later that the title search company had just taken our money but not actually performed the search and there was actually a lien on the property they had claimed was all clear. Then they and the bank we bought our home from both went out of business literally a few weeks later. Fortunately we had bought title insurance, but it took over a year to straighten the whole mess out! Our title insurance company told us that our experience has been very common since the housing bust began.

So, perhaps talk to the companies he sells title insurance for and find out what they do when they need to investigate disputed titles -- do they have their own internal division that handles that or do they outsource that work? If they outsource that work, what would it take for him to get in on that?
posted by Jacqueline at 4:24 AM on May 7, 2011

Just off the top of my head, as I've worked on the edges of real estate and insurance for the past decade:

-- Train to become an abstractor, as Jacqueline suggests; the foreclosure market needs this sort of expertise, even if the banks think they've gotten away without it so far. Plus it's a foot in the door for future title insurance sales. Training to become an abstractor is about the same commitment in cost and time as becoming an insurance agent.

-- Adding lines to his license may be a good idea, particularly homeowners, but how far you go may head down another path which may not be in line with the title insurance industry. If you get into car insurance and health insurance, you're dealing with frequent small claims, which can be time consuming. If you go this route, get the lines, but hire an entry-level agent to handle customer service. Health/life/car/homeowner/renter etc. can be very lucrative in the long-term once you get the customers, which could help even out housing market fluctuations.

-- Estate planning. If somebody's buying a house, they've got a future to plan for. You might even get your licensing through your state's insurance department, since whole life, annuities, etc fall under the insurance area but are frequently a foundation for long-term investment. Investing for the future doesn't need to happen right at closing, either, so it's another foot-in-the-door product -- get your licensing, then start calling people for whom you did title insurance in the past two years and see how they're doing. It also less administration-needy than personal insurance for car/disability/health/etc, so it's less likely to interfere with the existing business. The poor economy might make this a weak market, but it might also have people thinking harder about the future, too, especially if they're financially-sound enough to afford a house.

-- If you're just looking for a money path, a variety of commercial insurance, like errors & omissions, professional liability, surety bonds, construction bonds, etc, may be a good way to expand. It may not be directly related to title insurance, but is similar enough in training and administrative needs that it may be an easier path to extra income than adding life, health, or disability lines.
posted by AzraelBrown at 10:13 AM on May 7, 2011

These are both fantastic answers that give so much to think about and avenues to research. On behalf of my family, thank you both for taking the time to give such detailed, insightful responses. This is exactly the kind of quality I can only find on askme. Hope I can pay it forward!
posted by rabidsegue at 6:25 PM on May 11, 2011 [1 favorite]

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