Fraud and forgery claims represent 21% of the total dollars spent by title insurers on claims expense and losses, with an average claim cost of over $143,000, according to data released by the American Land Title Association (ALTA).
A new independent analysis conducted by the global consulting and actuarial firm Milliman over 127,000 claims associated with policies issued between 2013 and 2022 found nearly 30% of title insurers’ losses and claims expenses arose from title problems not discoverable from a public records search.
The new data analysis also determined that fraud and forgery claims were among two of the top three leading causes of loss and are five times more costly (at over $143,000 in total average claim costs) than all other claims, which averaged over $26,000. Fraud and forgery claims were on the rise due to threats from cybercrime, rising from 19% of total reported claims in the category of basic risks between 2013 and 2020 to 44% of claims within that category in 2022 alone.
For claims on Owner’s policies only, the average cost of fraud and forgery claims is more than $100,000, while the average claim cost for all other claims is more than $27,000. For claims on Loan policies only, the average cost of fraud and forgery claims is more than $194,000, while the average claim cost for all other claims is more than $23,000.
“The evidence is clear: expert title professionals do so much more than just scan public records or push a button to secure property rights,” said ALTA CEO Diane Tomb. “With the cost of fraud and forgery claims averaging more than twice the national average salary in the U.S., the risk of not purchasing a title insurance policy is far too high. This analysis highlights the significant risk exposure presented by any waiver of title insurance policies on loans purchased by the Government-Sponsored Enterprises or from any unregulated alternative product that does not provide comprehensive coverage against nearly a third of all claims.”
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