After decades of little change, the title insurance industry is making giant strides to embrace new technology.
"The real estate industry, historically, has been a traditional industry that has been slow to get into the e-commerce game," says Deborah DeMaddalena, senior vice president of new ventures at ACS Systems Inc. in Santa Ana, Calif. But lenders and real estate pros are being influenced by other companies and other industries, and now title firms are being more aggressive in exploring new technology. ACS Systems provides eBusiness services to Irvine, Calif.-based Fidelity NationalInc.
"I've been in the business since 1975, and 24 years later this is probably the most exciting time to be in the real estate industry," says DeMaddalena. "It's a time of monumental change, and opportunities exist for those companies willing to take the risk and be on the leading edge."
The Internet's rise may be the best thing that has ever happened to the title insurance industry, says Bob Palmer, senior vice president and CIO at Richmond, Va.-based LandAmerica Financial Group Inc. "Until five years ago there was nothing pushing the industry forward," he says. "The Internet has been a major player in that push. I think we're going to see dramatic changes in the way we do business over the next five years."
The amount of information available to title companies over the Internet has increased dramatically in recent years. Although the Internet is becoming a more popular tool for accessing, many companies still operate proprietary online systems that can be accessed with special software.
"Until it is all Internet-enabled, it will require some intervention to pull it together," Palmer says of the information. However, a fully automated title production and closing process may be on the horizon. "I would say that, within the next five years, every piece of information needed to close a real estate transaction will be available online in some fashion," he adds.
The shift to a completely automated title process may not be that far in the future, agrees Edson Burton, vice president and regional manager for commercial operations in the central region of-based Chicago Title Insurance. Title companies are moving forward cautiously, and are introducing technology where applicable, Burton says. But considering how rapidly companies are adopting e-commerce, the title industry could move to a complete electronic title production and delivery system in as little as two to three years, he notes.
Technology has become a significant issue in the title industry in recent years. "I think technology is a component of virtually every meeting that we hold," says Jim Maher, executive vice president of the Washington, D.C.-based American Land Title Association. The association founded its own technology forum in 1998, and the group will host its third-annual event in February 2000. In many ways, the title industry is even ahead of lenders when it comes to communicating electronically, Maher says.
"When push comes to shove, we are ready to talk electronically and our customers aren't," he says.
Commercial vs. residential The demand for immediate access to information is one factor prompting title firms to adopt new technology. "[Recipients'] desire for information is driving a lot of what's happening in the title industry and other industries," says Bill Blincoe, vice president of business and technology consulting for Chicago Title. "The attorneys servicing the transaction want to be able to service it in a more timely and convenient fashion."
However, the pressure to increase electronic efficiencies comes largely from the residential side of the title industry. Lenders such as Fannie Mae and Freddie Mac are striving to decrease closing costs.
"The volume on the residential side is so much greater than the commercial side that it requires that we move quickly to respond," says Burton. "On the commercial side, the industry is still dealing with lots of paper. And as much as we would like to get rid of the paper, we haven't gotten there yet." Title companies have been slower to introduce new technology to commercial customers because commercial transactions are significantly more complex than residential title. Burton adds that commercial transactions might require hundreds of pages of documents, which could make e-transaction less viable.
"On the commercial side it gets a little more difficult in terms of being able to provide electronic transactions," says Mike O'Neill, vice president of electronic commerce at Chicago Title. Residential transactions tend to be more singular in nature, while commercial requests are more collaborative, have more people involved and take longer to put together, O'Neill says. In addition, residential deals involve presenting findings, whereas commercial deals can involve more negotiation, he adds.
>From e-mail to e-commerce Delivering both the final product and supporting documents electronically is one focus on the commercial side of the title business. Commercial transactions typically feature a lengthy list of related materials such as maps and survey information. The additional documents make the electronic delivery process more complex.
"We have initiatives underway that will allow documents to be delivered on the Web through internal imaging systems or whatever format the customer is able to accept," says Blincoe. So far, customers have been satisfied to send and receive documents via e-mail. But as more attorneys opt to communicate via the Internet, the shift will be to transfer documents with browser-based applications rather than just e-mail, Blincoe says.
Chicago Title is testing that theory with a pilot Internet project aimed at commercial customers in the Chicago market. Rather than overnighting completed documents to client attorneys, Chicago Title posts documents on the Internet so attorneys can access and review them. Traditionally, the attorney would revise documents after they were sent, and then wait for an updated version. So being able to make changes as the document emerges saves time for both the client and the title firm, Blincoe says.
Chicago-based Ticor Title Insurance has come to rely more and more on electronic documents. "We have made leaps and bounds even in the last year," says Joy Selenis, Illinois director of technology resources for Ticor. Employees seldom need to pull a paper file. Instead, they use computers to access electronically stored data. Conversely, customers still want the security of the hard copies sent via fax or overnight delivery.
But the transition to electronic files is gaining momentum. Ticor Title is taking advantage of the ability to e-mail title commitments and statements to customers and lenders. In addition, title companies such as Ticor are already looking beyond e-mail to web-based applications. "The process will probably go more to a Web-based application where we can download a closing package from a Website," says Selenis. Ticor Title also is exploring opportunities that will allow customers to place orders for documents on Ticor's Website.
LandAmerica is testing many of its e-commerce initiatives at LandAmerica One Stop, a subsidiary that provides real estate services. One Stop offers both a web page and software that allow customers to take advantage of electronic commerce capabilities. For example, a lender can place an order and select services such as flood certification, appraisals or tax service directly from the Website. Currently, One Stop still needs to do some of the work manually, such as looking up records. The system is still evolving, says Palmer, but the goal is to be available to accept the order, access information and report findings back to the client through automated systems.
Accessing information The future of the industry is connectivity, Palmer says. Having the capability to link to other sources of electronic information is essential, especially now that title plants, tax liens and county records are becoming available electronically.
One of LandAmerica's primary initiatives to improve connectivity is a nationwide WAN that was launched in 1996. "The intent of the wide area network at the time was basically to connect our offices more efficiently," says Palmer. LandAmerica's WAN also has become a vehicle that allows the firm to better use the Internet in its 600 branch offices.
Because of the Internet's increasing popularity, LandAmerica decided in late-1997 to rewrite its back office systems to be "Internet-enabled" - allowing its systems to communicate with the Internet, Palmer says. The move was an effort to improve the company's existing software for title production and closings. Now, LandAmerica's system is being rewritten into a browser-based application to be run over the company's WAN. Eventually, the goal is to create a system that runs over the Internet, as well as enables the system to interact with other Internet applications.
Minneapolis-based Old Republic National Title Insurance Co. is making use of leading edge technology such as using the Internet for conducting e-commerce and sophisticated client server technology, imaging and work flow applications. "We are also centralizing production systems at many of our locations, implementing imaging to reduce the amount of paper being handled and building Websites to communicate electronically with our customers," says Kirk Knott, vice president and director of information systems for Old Republic. "The key factor in streamlining operations is implementing technologies that change the process flow and reduce the number of steps from order entry to final product," says Knott.
Old Republic is in the final phases of installing a frame relay WAN to connect its 204 offices by year-end.
New technologies ranging from data networks to e-commerce are expected to significantly impact the title industry's efficiency. Currently, the slowest parts of the title production process involve the components that still need to be done manually, such as sending someone to the courthouse to search through records. "If those courthouse records are online, it creates a dramatic savings in time and effort," says Palmer. As more data is available online, title insurers will be able to build sophisticated systems to retrieve, analyze and compile data needed to make insurance decisions.
Fidelity National Title's RealEC network and Santa Ana, Calif.-based First American Title Insurance Co.'s FASTWeb system are two examples of the title insurance industry's latest high-tech twists. Fidelity National implemented RealEC after working with ACS to improve productivity in its back-end processes by 41%, DeMaddalena says.
* RealEC is a nationwide, multi-vendor network that allows real estate customers to electronically select an array of products and services necessary to close transactions.
* FASTWeb is an Internet-based interactive ordering, routing and delivery system. Through FASTWeb, a customer can order title insurance, closing services, home warranty, appraisal and flood determinations. Similarly, First American offers FASTDirect and FASTWin, a Windows-based application, to meet customers' different connectivity demands.
This type of automation also will have a significant impact on reducing costs. "We would need less people to do the work," says Palmer, adding that staffing is one of the biggest costs for the title industry. "It also will allow us to have less bricks and mortar. We will need fewer offices due to the availability of electronic information."
Although companies will continue to maintain physical offices to receive customers, companies may be able to have fewer locations and rely more on a mobile work force in the future. Companies will be able to send staff out to meet with clients at their business or home to conduct a closing, Palmer says. As long as the employee has a laptop and access to the company network, he adds, they can conduct business anywhere.
Streamlining the process Many title companies are well on their way to a more efficient, electronic process. ACS Systems has been working with Fidelity National since 1994 to help streamline processes at Fidelity National Title. The first step focused on improving back-end systems. ACS worked closely with personnel to analyze work flow and improve efficiencies in how employees were handling the flow of information with functions relating to escrow, title production and closings. The subsequent improvements have been paying off for Fidelity National Title. A 1997 study showed that Fidelity had increased efficiency in its back-end processes with worker productivity rising 41%, DeMaddalena says.
Next, Fidelity began tackling e-commerce solutions, which involves connecting outside customers to those improved back-end systems. Fidelity has opted to use the RealEC network for its e-commerce solutions, DeMaddalena says. RealEC is a nationwide, multi-vendor network that will allow real estate customers to electronically select a broad array of products and services necessary to close real estate transactions. RealEC is the first multiple title underwriter alliance for electronic commerce. The RealEC network will initially provide title services escrow services, flood certifications, appraisal services, automated property valuations, document preparation, centralized funding services, tax notification services and credit reporting. "It's a nice solution for a lender customer because we now have a single point of integration to order one or more services from Fidelity," she says.
Fidelity's third initiative involves returning to the back-end systems, and integrating additional data sources to the title production process. The goal is to be able to electronically access information from title plants, courthouses and other resources, DeMaddalena says. Forging such data links will eliminate time consuming methods of manually searching for documents.
Santa Ana, Calif.-based First American Title Insurance Co. is focusing on several technology initiatives that will re-engineer the title process. "We want to be the first company in the title industry to create a completely integrated process," says John Hollenbeck, vice president and national title processes director at First American Title. First American's goal is to bring in an order electronically, route that order to a centralized production facility that can produce the order electronically, and then route the results of the order back to the customer - anywhere and in any computer platform, Hollenbeck says.
First American Title has developed a number of tools to achieve that goal. FASTWeb is an Internet-based interactive ordering, routing and delivery system. Through FASTWeb, a customer can order title insurance, closing services, home warranty, appraisal and flood determinations. The idea behind FASTWeb is that a customer can send First American an order electronically through the Internet by simply filling out information in a few user-friendly screens, Hollenbeck says. Once in FASTWeb, the order is routed to its proper destination for fulfillment. In addition to FASTWeb, First American also offers FASTDirect and FASTWin. "The reason that we have three different e-commerce systems is because customers want to connect differently," says Hollenbeck. Fast Direct uses a "black box" that allows First American to connect directly with customer origination systems, and FastWin is a Windows-based desktop application, he says.
First American's RAPID system will become the communication backbone for the company's e-commerce endeavors. RAPID will supply significant transaction volume to the title company as well. Its vision is to integrate customers' production computer systems into First American's own system. Once implemented, the customer may send an order to First American electronically without any human intervention on the part of the customer. Once in RAPID's hands, title orders will be passed to FASTWeb, then routed to the appropriate office for fulfillment.
The FAST Title and Escrow Systems are fully integrated, with links to escrow trust and general accounting services. Once deployed, it will support electronic commerce by communication with FASTWeb to both accept orders and supply order status information directly to customers. Second, it will promote re-engineered work flow by promoting collapsed job responsibilities. Third, it will support centralized back office operations in both escrow and title since the system will run over the company's wide area network (WAN).
First American's FASTSearch is an automated searching process. It seeks to automate the collection of information used in the examination of titles and production of title evidence. "FASTSearch allows a title search to be performed in about eight minutes, compared to about one day traditionally," says Hollenbeck. FASTSearch is able to accept customer orders electronically from First American. It then accesses information repositories, including address normalization software, tax searches, property indexes, general indexes, starters, documents, maps, legal descriptions and potentially other databases. In a perfect FASTSearch scenario, no human intervention would be required from the time an order is electronically received by First American until the time a completed search package is printed.