Peter
Birnbaum,
the
executive
chairman
of

Chicago-based
title
insurance
underwriter


Advocus,
has
been
a
vocal
supporter
of
the
bill.
Reflecting
on
his
44-year
career
in
the
title
industry,
he
expressed
frustration
over
the
state’s

regulatory
approach.​

“Over
the
last
10
to
15
years,
(IDFPR’s)
willingness
to
engage
and
take
on
some
of
these
bad
actors
has
dissipated
to
the
point
where
they
literally
do
nothing,”
Birnbaum
said.
“Today,
they
only
have
one
full-time
staff
person
devoted
to
the
title
insurance
division.”​

Illinois
stands
out
as
the
only
state
where
title
insurance
is
not
regulated
by
a
department
of
insurance.
Birnbaum
believes
this
unique
structure
has
contributed
to
a
lack
of
effective
oversight.​

“Early
on,
it
worked
pretty
well,”
he
noted.
“But
now,
the
department
generates
about
$2
million
a
year
in
revenue
from
the
industry,
yet
they
don’t
devote
resources
to
us.”​

Addressing
questionable
practices

The
absence
of
robust
enforcement
has
allowed
unethical
practices
to
flourish,
according
to
Birnbaum.
He
pointed
to
“sham
affiliated
business
relationships”
as
a
particular
concern.​

“Some
of
the
things
that
we’re
talking
about
are
pretty
egregious,”
he
said.
“Bad
behavior
is
usually
passed
along
to
the
consumer
in
the
form
of
higher
prices.
The
Illinois
Department
of
Insurance
has
a
very
good
history
of
regulating
the
companies
currently
under
its
jurisdiction.
They
have
a
good
reputation
for
protecting
consumers
and
regulating
conduct.”​

Birnbaum
recounted
recent
instances
where
homebuyers
faced

closing
fees
that
were
$500
to
$1,000
higher
than
market
rates
due
to
such
arrangements.

“In
every
case,
the
company
backed
down
and
reduced
their
fee
to
market
when
challenged,”
he
added.​

Historical
context,
looking
ahead

Concerns
about
Illinois’
title
insurance
practices
are
not
new.

A

2007
report
by
the

U.S.
Government
Accountability
Office
(GAO)
highlighted
issues
such
as
referral
fees
and
affiliated
business
arrangements
that
potentially
reduce
price
competition
and
could
indicate
excessive
pricing
by
insurers.

Further
scrutiny
came
with
the
2009
case
of

Chultem
v.

Ticor
Title
Insurance
Co.,
where
the
plaintiffs
alleged
that
certain
title
companies
paid
attorneys
for
referrals
without
requiring
them
to
perform
meaningful
services,
violating
the
Real
Estate
Settlement
Procedures
Act
(RESPA).
​

Birnbaum
remains
hopeful
that
the
proposed
regulatory
shift
will
lead
to
more
effective
oversight
and
consumer
protection.

“It’s
speculative
that
(the
DOI)
will
do
a
good
job,
but
past
is
prologue,”
he
said.
“I
think
it’s
a
good
bet.
I
know
that
the
current
regulator
is
a
bad
bet.”​