Do you really know the difference between the underwriter and the title agent?

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I recently received a phone call from a salesperson selling services to title agencies. The service was connecting real estate agents to title agents when customers listed and sold homes on a certain web site. Unfortunately, I could not get the salesperson to grasp the concept that my company was an underwriter, and we did not have direct offices. He continued extolling the virtues of his service and explained how I could capture more real estate agent deals if my company used his service. Again and again, I explained that my company was an underwriter, and we do not communicate directly to real estate agents or solicit real estate agent deals. Needless to say, the call was frustrating.

However, the call did get me thinking: Do people outside our industry know what the role of title agent and underwriter are and how they intersect? The title agent/underwriter relationship is as old as title insurance itself.  At the onset of the industry, every state had local or regional underwriter companies. Most were located in large cities.  These underwriter companies filled the role of both the title agent (handling individual transactions) and issuing insurance (title insurance policies).

Over time, many states began moving to a title insurance agency model. The city or state underwriters started appointing abstract companies in local communities to issue their policies. For the first 75 years of the 20th century, most states operated with this patchwork of having title underwriters in large cities, acting as both the title agent and insurance company, and smaller communities had abstract or independent title agents who acted as policy issuing agents for the insurance company. This framework blurred the lines of what a title agent does and what an underwriter does.

Starting with the major mergers of regional title underwriters in the 1980s and 1990s, title underwriters became more national in scope. Many underwriters increased their number of independent agents to include agents in all 50 states. Those larger companies began to diversify their operations, separating the pure underwriter element from the title agency element of doing specific transactional work. This operational change continued in the 2000s as the so called “direct offices” of underwriters were re-classified as “affiliated agents,” and became licensed under the agency laws of each state. While legally, most offices where closings happen are licensed as agents today, they still blur the lines between title agent and underwriter because the title agencies use similar sounding names as the underwriter companies they are associated with. Think of ABC National Title Insurance Company as an underwriter and its affiliated direct office ABC Title Company, for example.

In an attempt to delineate the roles of the title agent and underwriter, the following Venn diagram may be helpful:

Some underwriters choose to operate 100 percent through independent agents. Other underwriters have a dual business model in which they operate direct issuing offices of the underwriter and work with independent agents across the country. Both a title agent and a title underwriter can close individual deals. But here is the concept that seems most difficult to grasp – the business associates at an underwriter who work with agents are far removed from the day-to-day closings of those agents. Few underwriters today are so small that the day-to-day closings and the appointment of agents are done by the same person or people. Therefore, generally speaking, underwriters appoint agents (affiliated or independent) and agents close deals.  The companies may have similar sounding names, especially if its an affiliated (direct) agent, but the roles are separate and distinct. 

“If you work just for money, you’ll never make it. But if you love what you are doing, and always put the customer first, success will be yours.” ~ Ray Kroc, 1902-1984, American Business Tycoon, built the McDonald’s Corporation into a worldwide fast food chain.

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