K.E.L. takeover leads to fee for title insurance policies
By Richard Burnett, Orlando Sentinel | |
McClatchy-Tribune Information Services |
More than a year after the state took over the floundering
This year alone, regulators expect to deal with a projected
K.E.L. Title's court-appointed receiver has asked for "the authority to continue to request assessments on an annual basis, until no more policies of the title insurer are in force or the potential future liability has been satisfied," the state said in a court filing earlier this year.
Observers say it is a vexing turn in the case of K.E.L. Title, formerly owned by partners of the KEL law firm in
The amount of the fee is still being tallied, but it is expected to be about
"To me, you have to wonder why consumers should pay for their mistakes," said
The law partners --
K.E.L. Title's claims soared as homeowners discovered flawed sales closings and bogus title insurance sales. When the state took over in
Insurance experts said a thorough audit by K.E.L. Title's management would likely have detected -- and certainly discouraged -- the improper account activity.
"I suspect K.E.L. was duped in this case," said
Demotech estimated the fee at
K.E.L. Title is the first
Title industry officials said such cases are rare in
He noted that property-and-casualty insurers charge their customers on an ongoing basis to build a guaranty fund that covers such default losses.
"I know it is frustrating for people to see that they are paying for somebody else's apparent wrongdoing, but ultimately they are paying a very, very small amount," said Stein, an underwriting expert for the
The failure of K.E.L. Title was not the first title-industry problem for Kaufman, Englett and Lynd. Regulators suspended the license of their title policy sales unit --
Real-estate expert
"That kind of structure is fraught with risk," he said. "I would think it is not a good business model, especially for a law firm, and for the title business in general."
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