Laufer, J. and Norelli, N. (2010).

“For these reasons, we declare the anti-rebate statutes, as they relate to a title agent’s ability to negotiate his or her share of the risk premium, to be unconstitutional.” Chicago Title Insurance Co., et al., Appellants, vs. S. Clark Butler, et al., Appellees. [October 19, 2000] Corrected Opinion PER CURIAM

Within the past several years, there have been a series of Florida reissue rate class action settlements involving title insurance underwriters that appear to be consistent with the decision in S. Clark Butler vs Florida Department of Insurance. The consistency factor, however, lies in the fact that the settlement agreements themselves exclude overcharges, if any, with respect to the portion of the title insurance premium retained by the issuing agents. This portion (usually 70% of the risk rate premium) is for services rendered with respect to the agencies performance of primary title services.  See Sec. 627.7711, Fla. Stat.; Sec. 626.841, Fla. Stat.

Primary title services” means determining insurability in accordance with sound underwriting practices based upon evaluation of a reasonable title search or a search of the records of a Uniform Commercial Code filing office and such other information as may be necessary, determination and clearance of underwriting objections and requirements to eliminate risk, preparation and issuance of a title insurance commitment setting forth the requirements to insure, and preparation and issuance of the policy. Such services do not include closing services or title searches, for which a separate charge or separate charges may be made.

The Butler case suggests that any attempt to bind title insurance agents in a reissue rate consumer class action lawsuit filed against a title insurance underwriter in Florida that alleges a premium overcharge could be problematic, especially in regard to satisfying the elements needed for class certification. Real estate transactions involving a Butler-negotiated rebate present individualized issues of peculiar matter (i.e., private contractual interactions between the policy issuing agent and the consumer) with respect to the portion of the premium charged for the performance of these primary title services. This fact alone could undermine class claims in any class action lawsuit brought that insist on an attempt to bind portions of the title insurance premium charged for the performance of primary title services.

As a result of Butler, Florida title insurance rates are promulgated with respect to the underwriter’s portion of the total premium charge and negotiable with respect to the agents portion. For example, assume a situation where a consumer is given a Butler rebate and the transaction calls for the consumer to be given a reissue credit. If the consumer doesn’t receive it, the premium charged to the consumer could still fall below the rate permitted pursuant to the Florida promulgated rate scheme, but only to the extent of the agencies portion. In Florida, the agencies’ portion can be as high as 70% of the total risk rate premium set forth in the F.A.C.  The underwriter, however, in a situation identical to the one quoted above would still collect from the consumer a premium (based on a 70% /30% split) in excess of what the regulations permit an industry to charge, which would constitute an unjust enrichment.

Finally, the Butler case delineates terms for a negotiated marketplace between title insurance agents and consumers with respect to the charge for the performance of primary title services. Essentially, these are private contracts between consumers and title insurance agents. The inescapable conclusion is that these transactions involve individual issues of peculiar matter with respect to the portion of the title insurance premium retained by the issuing agent.

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