Home Insurance Title insurance for realty sector fails to pick up despite made mandatory

Title insurance for realty sector fails to pick up despite made mandatory

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Title insurance for realty sector fails to pick up despite made mandatory

The Real Estate Regulation and Development Act 2016 (RERA) mandates the purchase of Title Insurance for all new and ongoing property developments registered with the regulatory body.

The concept of ‘Title Insurance’ aimed at protecting the promoters and customers of the real estate projects against many risks, has failed to take off due to high pricing and lack of clarity on a host of technical issues despite being made mandatory for real estate projects.

The Real Estate Regulation and Development Act 2016 (RERA) mandates the purchase of Title Insurance for all new and ongoing property developments registered with the regulatory body.

Though IRDA has already approved seven products of the seven general insurers including, New India Assurance, National Insurance Company, ICICI Lombard General Insurance, Bajaj Allianz General Insurance, HDFC Ergo General Insurance, Tata AIG General Insurance, and Liberty General Insurance, there are hardly any transactions for the Title Insurance products with many of them seeing only two or three deals, said an industry official.

“We are keen that market for the title insurance picks up as the government wants to promote housing for all in the country. How much premium the insurance companies can charge is left to them,’’ said an IRDAI official.

Title insurance, which is common in the US, is a form of indemnity insurance which insures builders and customers against financial loss from defects in title to real property and the invalidity or unenforceability of mortgage loans.

The premium would vary between 0.5 to 3 percent of the sum insured for a seven-year policy which can be extended further. Though such a product is already made mandatory in the Act, the state governments will have to notify the mandatory feature of the product separately. “The state governments are in the process of enacting Land Titling Bill and may consider notifying the mandatory feature of the Title Insurance,” said an official source.

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