Fidelity National Title To Refund $2.2 Million To Settle Kickback Probe
By David Dankwa
September 27, 2005
TALLAHASSEE, Fla. (BestWire) - About 10,000 central Florida residents will receive $2.2 million in refunded premium as part of the state's settlement with Fidelity National Title Insurance Co.
Fidelity National, which was accused of illegal referrals of business to title insurance agencies, also agreed to pay a $1 million fine and terminate its relationships with title agencies that allegedly received the illegal payments.
Tom Gallagher, Florida's chief financial officer, is taking steps to revoke the licenses of 60 title agencies that have been linked to the illegal arrangements.
Investigators with the Florida Department of Financial Services' division of Agent and Agency Services said some of the sham entities didn't have separate telephone lines or offices, had no full-time employees, and their business operations were in name only -- that is, set up through a fictitious arrangement with Fidelity National for the sole purpose of steering business to the insurer, according to Gallagher's office.
Title insurance companies and agents are barred under Florida and federal laws from entering illegal affiliated business arrangements in an attempt to funnel improper payments to builders, real estate agents or mortgage brokers. They also are barred from providing payments or other things of value to real estate agents, mortgage lenders and builders in exchange for business referrals. Illegal inducements include direct payments; free advertising; paying for office equipment; and gift certificates.
Last year, Gallagher, who oversees the financial services department, issued a warning to the industry against engaging in illegal kickback arrangements. His office is continuing to investigate all title agencies for similar practices, he said.
Fidelity National, the first to reach a settlement with the department, currently has a Best's Financial Strength Rating of A- (Excellent).