The Perils of Complete Regulation

Every industry suffers from the occasional bad actor. The title insurance industry is no different in that regard. Most market participants pursue their job with the utmost integrity, motivated by the simple desire to exchange a quality service at a fair price. What distinguishes the title insurance industry from others is that the regulatory system set up here in Texas incentives questionable business conduct. The law leaves title insurance companies with almost no viable avenues through which to compete for customers directly. The companies instead must direct their attentions at third-party intermediaries, who refer them business. Introducing direct competition into the title insurance market will not fully rid the industry of anticompetitive activity immediately, but it will begin to force the industry to cater to consumers in fairly short order. In nearly every industry outside of title insurance, Texas recognizes that competition, innovation, and free negotiation with consumers represent the most effective means of keeping participants honest and considerate of the interests of everyone else involved. Title insurance is a peculiar practice but its participants respond to incentives just like everyone else.

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