Startups are poised to disrupt the $14B title insurance industry – ProWellTech
If you have purchased a home in the past decade, you’ve probably started the process online. Maybe you searched your future dream home on a website like Zillow or Realtor and you might have been surprised at how quickly things went from seeing a property to making an offer.
When you reached the shutdown, however, things slowed down. Some of these roadblocks have been envisaged, such as the process for obtaining a mortgage, but one probably was not: the tedious and time-consuming process of obtaining title insurance – that is, an insurance that protects your right to home ownership in the event of any claims against it after the sale.
For a product that is almost necessary for buying a home, title insurance is not something that many people know until they have to pay for it and then wait up to two months to get it.
Now, finally, a handful of startups are hiring the insurance sector, hoping to make the process of purchasing a policy simpler, cheaper and more transparent. These startups, including Spruce, State Title, JetClosing, Qualia, Modus and Endpoint, fully or partially enable the process of purchasing title insurance. It remains to be seen whether these startups can finally overthrow the title’s insurance monopoly, but they are already causing cracks in the system.
To this end, we have outlined what is not working in today’s securities sector; recent developments in technology and government that are preparing the industry for change; and a summary of some key trends we’ve seen in space as entrepreneurs start capitalizing on a tipping point in a $ 14 billion secular business.
Title 101 insurance
To understand how startups are starting to challenge historic securities insurance operators, we must first understand what title insurance is and what title companies do.
Title insurance is unique compared to other types of insurance, which require ongoing payments and protect a buyer future accidents. Instead, title insurance is a one-time payment that protects a buyer from what he has it already happened – namely errors in the public register, privileges against property, inheritance claims and fraud. When buying a home, the title insurance companies research the history of your property, contained in the public archives, to make sure there are no such complaints, so correct any problems before granting a title insurance policy.