Title insurers are riding a wave of strong performance in 2021 and into 2022. In addition to a robust market, many leading title insurers are adding digital title insurance, often by partnering with start-ups. Digital title insurance represents the future of the industry, providing benefits for title insurers and their customers.
For title insurers, digitizing the title insurance process requires a series of steps. This guide provides insight into digitizing the title insurance process, what it is, why it matters, and how to do it successfully.
What is digital title insurance?
When a property is bought or sold, a public record of the transaction is filed in public archives. These records are all tied to the home address. So, when a new purchase or sale occurs, the new buyer purchases insurance that will protect against any issues with past errors or issues with the property. This “title insurance” protects against old liens, past permits, surveys and much more, ensuring that the new owner has a right to claim the property.
Digital title insurance is traditional title insurance, but moved online. Like traditional title insurance, its digital counterpart includes a number of elements:
Online title search: Digital title insurance benefits most from the digitization of historical documents. As public records are brought online, title agents easily can access the documents they need to perform a title search.
Title workflow management: Title insurance is connected to the complex home buying process, which also usually includes a buyer, seller, real estate agents, lawyers and lenders. Digital title insurance can help ease communications between these parties with digital document sharing, workflow software, calendars and more.
Underwriting technology: Online title insurance requires underwriting, which, when done offline, is a manual and time-consuming process. Digital underwriting uses real estate data and predictive analytics to dramatically improve the speed and accuracy of underwriting.
Remote document management and signing: Title agents often spend a lot of time manually printing, collating and organizing documents for a real estate transaction, all of which is moved online in digital title insurance. This not only reduces the manual burden and cost of paper documents, it allows for quick corrections and updates as well as remote document signing.
Remote online notarization: Several key processes in the real estate transaction, including notarization, can now be done online. This enables title agents to perform eClosings (entirely digital closings).
Why demand for digital title insurance is growing
After many years of title insurance being dominated by a handful of powerful market leaders, a variety of changes forced by the pandemic have led to the opportunity for market disruption. New startups and new product innovation within large companies has propelled the shift to title insurance moving online.
Digital title insurance is part of a larger digital transformation that is occurring across the real estate market as homebuyers and the professionals that support real estate transactions see the benefits:
- Speed to close: One of the main reasons it takes 30-90 days to close on a new home is because title insurers need time to physically visit and research public housing records at a public office or courthouse. This process is time-consuming when done manually, but significantly faster online.
- Costs savings: With a more efficient process, title insurers see tremendous cost savings after an initial investment in digital capabilities. Agents don’t have to pay for travel and research time, which increases efficiency and lowers costs.
- Improved accuracy: Title insurance includes a number of manual processes from document search to underwriting to preparing documents for closing. With digital title insurance, many of these processes are supported by software that can spot errors, allow for easy corrections and help with analysis.
- Customer experience: Consumers have moved much of their daily lives online, and expect real estate transactions to be available at the touch of a button. Digital title insurance is part of the transformation in real estate to appeal to buyers who prefer a fast, simple and digital experience.
How to implement digital title insurance
Incorporating digital title insurance as an offering to customers requires title agents to select a vendor partner, implement the technology, train staff and partners and get used to a new process. Here are steps to ensure successful implementation:
- Prepare needs before talking to vendors: Determine what your top concerns and needs are. Be sure to interview vendors to understand where they specialize, how much support they offer and what the ROI looks like after implementation.
- Start small: Offering digital title insurance will require bringing different elements of the title process online. Starting with one or two projects that provide a big impact can help create momentum and show the value of going digital.
- Ask for help: Digital vendors have experience with other title agents and can help with implementation, customization, process and training. They often have customer service staff, content and events that can help title insurers make the most of their digital investment.
- Educate staff: Everyone needs to understand why and how title insurers are moving to a new digital process. Providing an understanding of the benefits, a roadmap of the changes and frequent training will help everyone to transition.
- Measure and celebrate wins: In order to gain support for future digital improvements, it’s important to share when milestones are reached and when benefits are starting to positively impact business, agents and their customers.
Digital title insurance is the future
With so much demand from customers to move paper-driven processes online, title insurance is continuing to experience the need for digital transformation. Digital title insurance doesn’t just benefit homebuyers who want to complete the transaction process online. Time and money savings, efficiency, and increased accuracy all add up to major ROI for title insurance agents who bring their business online.