If one were to write a book on the history of title insurance, early chapters would trace the evolution of regional companies to ones with more of a national scope. And the possibility of global expansion of title services - although still considered by many experts to be a long shot - may someday merit its own chapter.
Real estate was the last major industry to adopt technology, and title insurance was one of the last segments of the industry to embrace it, says Carrie Hoyer, principal and secretary-treasurer of Milwaukee-based Wisconsin Title Service Co. Inc. However, title insurers have found technology to be a potent tool that improves their efficiency and enables them to deliver more services.
"We were the last piece of the puzzle," says Hoyer. "Title people know now that they have to embrace technology if they want to stay in the industry because today's customers want to communicate electronically. They're totally technology-driven."
A technology leader First American Title Insurance Co., one of the nation's largest title insurance firm, is also a leader in technology applications. During the past two years, the Santa Ana, Calif.-based company has transferred a large portion of the title search and insurance process online by rolling out a series of e-commerce systems. These systems provide mortgage lenders with rapid, online access to property files, credit reporting, tax information and other data that, until now, has been stored away on paper.
"We're using technology to automate the title search process," explains John Hollenbeck, vice president and national title processes director of First American. "The old way was to set up shop at the county recorder. Now, we're building a technology infrastructure to centralize our back-office operations, and we're starting to roll out a national system for producing title and closing services."
Hollenbeck says First American has designed a series of e-commerce systems that provide access to the title, mortgage, credit reports and other financial data required by its customers. FASTWeb provides instant access to mortgage solutions. FASTWin, operating from a Windows-compatible application, provides flexible desktop access to multiple products from a single source. FASTDirect provides a direct-connect solution that interfaces with a customer's loan origination system (LOS). Each solution delivers appraisal and title information, credit reports and flood determinations. In addition, FASTCredit, a component of FASTWeb, delivers credit report data from three different credit bureau sources online in seconds.
Stewart embraces technology Technology also comes in several forms at Houston-based Stewart Title Guaranty Co. Stewart Morris Jr., president of the company, says the technologies include production systems, network infrastructure for e-mail and an Internet presence.
Morris cites a common platform for production as one of Stewart's major accomplishments. "We are homogeneously installed with the AIM system nationwide in affiliated offices and some independent agents," he explains. "The network is a way we provide e-mail and Intranet communications to our associates."
Stewart is also joint venturing with another underwriter in an open e-commerce system called RealEC, which allows customers to choose the information company they wish to place orders with and offers a wide range of products including flood, credit, title, closing and collateral valuation.
The company also is rolling out a Website template for its affiliates and hosting the sites, as well as offering Web services to its agents. One other area of technology is StarNet, Stewart's national network of agents who are servicing the requirements of national clients through electronic communication.
For LandAmerica Financial Group Inc. of Richmond, Va., the key to operating as a national entity from a technology perspective is connectivity. Robert Palmer, senior vice president and CIO, says the company began its preparations in 1996 with the implementation of a wide area network (WAN) and a corporate e-mail system. "Over 90% of our 600 offices nationwide are now on the network, using e-mail and Intranet applications on a daily basis," he says. "It has resulted in tremendous productivity gains because of our improved ability to communicate and operate internally with our customers.
"We're now rolling out our crown jewel to tie all this together: Title Quest 2000," adds Palmer. "It's a combination of back-office software, allowing our offices to operate more efficiently, centralized data bases for easy access to corporate information and connectivity to customers via the Internet."
The Philadelphia-based National Title Services Division of Fidelity National Title Insurance Co. of New York is embracing e-commerce, according to James Kilgallon, senior vice president and director of the division. He explains that the RealEC e-commerce system, a joint venture between Stewart Title and Irvine, Calif-based Micro General, in which Fidelity has a controlling interest, provides Internet-based order placement tracking and online document viewing. Order information is keyed into the RealEC web and transmitted through the RealEC network. Detailed status reports are available for viewing and downloading along with the ability to deliver online documents associated with the real estate transaction.
Wisconsin Title Service wants to be the provider for its customers who want paperless systems. On its Website, customers can place orders for title commitments, consumer loan letters, loan closings and credit reports. The company also can send the title commitment to the customer via e-mail.
At Chicago Title Insurance Co., various Websites are used to provide customer information including a real estate base for the United States and Canada, says Edson Burton Jr., vice president and central region manager-commercial. The company also is using technology to consolidate operations wherever possible by combining production facilities. "We're targeting the establishment of 10 to 12 production centers nationally instead of having a bureau in every county," he says.
Global expansion of title insurance services is not something that sources expect to happen anytime soon but it's not ruled out as a possibility. Wisconsin's Hoyer, for example, says the technology is already available. "There are many software packages that are global in nature," she says. "Contour is a loan origination software that we and many of our customers use."
Palmer says one problem concerning global expansion is that depending on the local government, it can be difficult to verify the accuracy of records. Even so, LandAmerica and some other firms have small operations in Canada. Two nations that could be early targets for global expansion are Mexico and Israel, he says.
Five-year industry outlook Hoyer expects the industry eventually will become totally paperless. Virtual closings will be routinely offered so that a closing can be performed with the parties in multiple locations, she says.
Kilgallon also expects the title insurance process to be completely electronic in the next five years, depending on the quality of public records.
Morris comes close to that estimation. "Business will be done almost completely with e-commerce, and closings will be done electronically with a reduction in the number and size of documents required," he says.
Burton foresees fewer and much larger title insurers through consolidations that will serve fewer customers as a result of consolidations in their customers' industries. However, he disagrees with Hoyer and Kilgallon. "I don't believe we'll be totally electronic because we rely on information from a variety of sources, including municipalities that won't have the capabilities to communicate electronically," he says. He says that the electronic signature hasn't been perfected to the point that it will facilitate signing the documents required at deal closings.
Palmer doesn't think the industry is to the point that a title transaction could be handled entirely by electronics. The actual title policy creation and delivery will be the first part of the process to go totally electronic, Palmer says, but the greatest barrier is the ability of courthouses to accept and record documents electronically. It may take several years for the nation's 3,300 counties to get up to speed, but he anticipates that within five years major metropolitan areas will have that capability.
Leaner operations expected Title insurance traditionally is a regionally focused industry that places a premium on personal relationships. With the technology explosion, is regionality evaporating in favor of a new, leaner operational backbone?
Hoyer thinks that indeed is the case. She envisions the larger title companies operating Internet-accessible, global title-based data centers. "A company in California will some day write a commitment for Wisconsin," she says.
Morris concedes that the localism of the title company will fade somewhat but believes local relationships in the closing process will remain important for a while. "The work on the transaction in the future could be handled from anywhere with the backbone being an e-commerce network of service providers," he says.
Hollenbeck anticipates leaner operations and believes title companies will become more centralized, even though laws relating to title properties may not be uniform across the states.
Palmer, however, thinks there will continue to be regional differences in the way real estate transactions are handled and processed for the foreseeable future. Sources do not foresee technology erasing personal relationships, which is a necessary part of the title process.
Morris adds that the personal element is important because it builds the client's confidence and trust.
But the Internet can provide an even more confidence-building experience if it is used to provide 24-hour a day, online access to important transaction information, says Morris. "Additionally, with the Internet, buyer and seller can more easily see the documents prior to closing and, even more importantly, have hyper-text descriptions of all important terms."
Burton points out that commercial real estate transactions generate questions that require interaction among all of the interested parties. "We might be able to complete the transaction electronically but getting to that point will require direct communication," he says.
Palmer says there will be those who prefer the personal touch, but the growing trend is toward saving time and accomplishing tasks from the comfort of one's living room.
"As time goes on, there will be more and more people who do not know of life without a computer and the Internet.
"The table closing will not go away until everyone becomes more comfortable with an electronic closing," adds Palmer. "But in the future, the percentage of table closings will be replaced by electronic closings when they are available."
Despite the conveniences and speed of technology, there are still some customers who prefer to execute transactions the "old fashioned way," via paperwork and personal contact. Sources concede, though, that their numbers are dwindling. "Customers like personal contact, but they don't like paperwork," says Hollenbeck.
Not surprisingly, today's customers are demanding faster, better and more economical service based on what technology provides. "They want us to be ahead of them in technology so that we're there before they are even ready for it," says Hoyer. "They're also looking for one-stop shopping and outsourcing opportunities that make sense to them."
In Kilgallon's view, customers want title insurers to be client advocates. "We must be able to provide the highest degree of service and pricing," Kilgallon notes.
Palmer says accuracy has been LandAmerica's foremost customer requirement, and now they're expecting speed to complement a "no-excuses, no-hassle environment."
Burton says the primary requirement is to understand the customer's business, then tailor Chicago Title's services to meet the customer's needs.
Industry challenges Notwithstanding the rapid advances being made in technology, there are still a number of challenges ahead for title insurers, according to Hoyer. Chief among them are:
* how to make profits when the product becomes more of a commodity than a service; and
* how to support varying levels of technology for all customers when each moves into technology at a different pace.
Kilgallon says that devising creative ways to enhance a customer's financial performance is the primary challenge for title companies. "We have to partner with those who give us the ability to use modern technology to its fullest extent and provide our services quicker, better and cheaper," he adds.
Palmer says that changing employees' attitudes about technology is the foremost challenge. He says he's already seen a change in mentality on the part of LandAmerica employees toward embracing technology and opening their minds as to how it can enhance their performance.