The lawsuit alleges that, while New York law allows these companies to set title insurance rates collectively through a rate setting organization, the defendants had acted "outside of this authority," according to a complaint filed in U.S. District Court in Brooklyn earlier this month.
NEW YORK (Reuters) - A group of title insurance companies, including Fidelity National Financial Inc <FNF.N> and LandAmerica Financial Group Inc <LFG.N>, face antitrust suits alleging they set artificially high rates in New York.
The lawsuit alleges that, while New York law allows these companies to set title insurance rates collectively through a rate setting organization, the defendants had acted "outside of this authority," according to a complaint filed in U.S. District Court in Brooklyn earlier this month.
"They have done so by improperly including unregulated and unauthorized costs within their collectively set rates," the complaint reads. "These rates -- which for the average home or property purchaser are in the thousands of dollars -- bear no reasonable relationship to the cost or expense of providing the insurance."
Title insurance protects the purchaser of a property from any unidentified defects in the title that would affect the ownership and use of the property, including the right to resell it.
!ADVERTISEMENT!Other defendants besides units of Fidelity and LandAmerica include First American Corp <FAF.N> and Stewart Information Services Corp <STC.N>, and certain of their units, as well as rate setting organization Title Insurance Rate Service Association Inc (TIRSA).
The plaintiffs are four state residents who bought title insurance. A related complaint was also filed in the same court on February 7.
A LandAmerica representative said the company will continue to work closely with the insurance department.
"We will aggressively defend ourselves with respect to this complaint," spokesperson Lloyd Osgood said in an e-mailed statement. "LandAmerica is committed to adhering to the highest standards of business practice."
TIRSA Executive Director David Sidikman said they were studying the documents and intended to "fight it and resist it with full vigor."
Fidelity, First American and Stewart could not be reached immediately for comment.
Under New York law, title insurance rates may be collectively set through Title Insurance Rate Service Association Inc, which is comprised of state's title insurers, according to court papers.
The rate setting organization collects revenue and cost information and submits that along with the collectively set title insurance rates to New York Insurance Department, the court papers said.
The plaintiffs allege the defendants have made it impossible for the insurance department to review the rates by principally basing them on costs the department has "neither the authority nor the ability to assess."
The costs, called agency commissions, "chiefly cover kickbacks and other costs unrelated to the insurance of title insurance," the plaintiffs allege.
The plaintiffs are seeking to enjoin the defendants' allegedly illegal activity, as well as unspecified damages.
(Reporting by Paritosh Bansal; Editing by Andre Grenon)
