Slower housing market conditions, mortgage rate volatility and rising affordability challenges took their toll on the title insurance industry during the third quarter of 2022. During the quarter, the title insurance industry generated $5.4 billion in title insurance premiums, down 20.6% year over year, according to the American Land Title Association’s Market Share Analysis released Tuesday.
For the first nine months of the year, overall title premium volume was down 7.7% year over year at $17.6 billion.
The net income generated by the industry was also down considerably year over year at $342.9 million, dropping from $616.3 million recorded one year ago. Despite this sizable drop, this was still the fourth highest-earning third quarter in the last 13 years.
“Results of the latest quarter reflect headwinds from higher interest rates that have resulted in a significant drop in home sales and mortgage refinances the past several quarters,” Diane Tomb, the CEO of ALTA, said in a statement. “While the housing market remains in a cyclical downturn, ALTA members will continue to deliver a valuable service and insurance product. Title insurance is the best option to reduce risk and protect property rights for consumers and lenders.”
The five states with the largest title premium volumes were Texas ($863.7 million), Florida ($689.9 million), California ($423.6 million), New York ($339.6 million), and Pennsylvania ($220.1 million). The same five states held the top spots in Q2 2022.
All five states recorded year-over-year decreases in title premiums during the third quarter, with California recording the largest yearly drop at 46.3% and Florida recording the smallest annual drop at 5.5%.
Total operating income for the industry was down 19.6% from a year ago, and operating expenses dropped 18.8% in the same time period. However, loss and loss adjustment expenses were up 30.0%. The industry paid $438.7 million in claims during the first nine months of the year, up from the $352.5 million paid during the same time period a year ago.
Top underwriters for the quarter by market share included First American Title insurance Co. with 22.6%; Old Republic National Title Insurance Co. with 16.3%; Fidelity National Title Insurance with 13.7%; Chicago Title Insurance Co. with 12.9%; and Stewart Title Guaranty Co. with 8.7%.
However, it should be noted that Chicago Title is part of Fidelity. With 26.6% of the market, it was again the largest company by share of premiums written during Q3 2022.
During the second quarter of the year, First American’s market share was 21.4%, while Old Republic’s was 14.9% and Stewart’s was 8.8%. Stewart — which continued its acquisition spree into early 2022 — has been looking to reclaim some of the title premium it lost in recent years. Stewart’s market share was 10.62% as recently as 2019.
Rounding out the top 10 for Q3 2022 was Westcor Land Title Insurance Co. with 3.4% of the market, putting it in sixth place. Commonwealth Land Title Insurance Co. had 3.4%, Title Resources Guaranty Co. had 2.9%, WFG National Title Insurance Co. had 2.5% of the market share, and First National Title Insurance Co. had 0.9%. After three quarters in the top 10, Doma Title Insurance Co. was bumped out.
Although the “Big Four” still command the overwhelming majority of the market with a combined market share of 74.2%, their collective grip is not what it once was. In 2019, independent title underwriters such as Westcor, WFG, and others had a combined market share just shy of 15%, which increased to 25.8% during the second quarter of 2022.
As the industry looks ahead to the end of the fourth quarter and the start of 2023, it also faces increased wire fraud threats, a challenging regulatory environment and the perennial problem of an aging work force — in addition to the slowing housing market.