The title insurance industry has revenues of $21 billion annually with minimal claims, yielding high profits of 95-97% for over 50 years. However, the industry is ripe for disruption due to antiquated and inefficient processes. New technologies like blockchain have the potential to replace title insurance by simplifying real estate transactions. This could significantly reduce the industry's operating costs and premium revenues. While title insurers may develop their own blockchain initiatives, it will be difficult for them to maintain their high profits in a modernized system with lower risks and costs.

1. TITLE INDUSTRY FACING DISRUPTION
By: Theodore Sprink, Managing Director, Integrated Growth Strategies
Capital Markets, Startups, Business Plans, Marketing Strategies, Sales Initiatives, Strategic Alliances
The title industry's revenues of $21 Billion in 2019, and minimal paid claims of 3-5%, yield gross
profit before G&A of a whopping 95-97%. These figures are consistent with ratios enjoyed by the
monopoly title industry for more than 50 years. Such revenue and profitability are likely to be
defended by the title insurance industry as necessary to sustain the bloated infrastructure to support
basic search, examination and underwriting.
According to research firm iBiSWorld 5,300 title companies and agencies employ more than
100,000 individuals in more than 10,000 title insurance offices, located in 3,100 counties
throughout the country. The industry is the classic status quo: antiquated, monopolistic,
excessively labor intensive, brick and mortar-based, stale, slow, costly, cumbersome and
dominated by a handful of bureaucratic "market leaders".
The common definition of disruption is "an innovation that creates a new market and value network
and eventually disrupts an existing market and value network, displacing established market-
leading firms, products, and alliances".
In the context of title insurance, the general proposition is that the title industry is ripe for
disruption due to the many points of friction. Industry pain points are the cumbersome, labor

2. intensive, brick & mortar based, time consuming and costly nature of the title insurance
underwriting and production that is reliant on searching and examining land registry records
maintained in thousands of locations in disparate paper, yellow-stickies, folders, boxes of files,
index cards, microfiche and software developed in the 1990s.
Many investors, lenders and Realtors believe smart contract-enabled blockchain technology
development firms, data aggregators & title transfer companies and/or state-controlled land
registry insurance firms may succeed in disrupting...essentially replacing...the antiquated title
insurance business.
Title insurance provides the basic function of insuring chain of title, ownership to real property
and the lender’s proper lien priority. It is estimated that three title insurance underwriting "family
of companies" control greater than 75% of the real estate title insurance market. There are three
looming problems for the title insurance monopoly.
• One is the successful advances of smart contract-enabled blockchain technology.
Blockchain is a “distributed network of computers” existing between permitted parties that
utilize the infrastructure of the internet to validate and process transactions. These
transactions are immutable and secured as “blocks of data” that cannot be modified or
replaced.
• The second is the emergence of aggregators of data and facilitators of closings, developing
deed-transfer programs, either on an uninsured or insured basis, by a non-title insurance
product, that simplifies the real estate transfer process for buyers, lenders, investors and
self-financed sellers.
• The third is the popular adoption of the "Torrens System" of state and county authority to
guarantee real property transfer, ownership and lien priority prominent in use in Canada,
Australia, Malaysia, Ireland, Singapore, Thailand and in the United States, in varying
degrees, in Iowa, Maryland, Virginia, Colorado, New York, Ohio, Michigan, Pennsylvania
and Washington.
New technology and business models can contribute to improved title transfer transactions thereby
mitigating the title insurance strategy of “reducing cost” by denying claims…which often requires
consumer litigation to enforce the costly title insurance policies...including the obligation to defend
against claims the consumers were forced to purchase in order to pursue their dream of American
home ownership.
While title insurers will likely pursue their own blockchain strategies, they are strapped with a
centralized infrastructure of thousands of brick & mortar store fronts, dozens of title plants, dozens
of claim centers, thousands of employees, hundreds of grotesquely overpaid executives, outdated
and disparate land record searching, a bloated operating platform of hundreds of absurd silos
designed in the 1950s and regulatory restrictions defined in RESPA in response to well publicized
decades of title insurance company bribery, kickbacks, legal abuse and sham business alliances.
Many industry veterans predict that centralized and bureaucratic title industry blockchain
technology initiatives will include yet more unnecessary insurance components, in an attempt to

3. maintain revenue and historic net profit margins as a method of protecting revenue, multiples,
market share, market cap and a practice of rejecting claims to protect profits.
However, in the event new technology companies fail in their attempt to effectively replace (land
registry) title search functions, likely due to lack of capital, they can be anticipated to concede to
the status quo of title insurance underwriters and simply advance a value proposition of "parallel"
transactional processes intended to improve the gathering, recording, storage and access to real
estate data. Or, they can be anticipated to reverse their earlier claims of necessary disruption, and
to sell or contract themselves to the title company technology divisions in an effort to avoid
business failure.
As a defensive strategy, the title insurance industry may develop its own individually branded or
collective blockchain initiatives. However, to do so they will have to admit to the significant cost,
time, quality and efficiency advantages that reduce risk, which regulators will “reward” with
substantial reductions in title underwriting and production premiums. Big problem for
shareholders and institutional investors.
The title insurance conundrum is that a shift to blockchain technology, a data aggregator/title
transfer concept that is non-insured or utilizing a different form of insurance, or expansion of the
Torrens System…and the potential development of tokenizing real estate for the speed, cost saving
and accuracy of purchase and sale transactions…the title companies must adjust their "filed rates"
to more accurately reflect the risk factors referred to above.
The obvious result of reduced operating costs and risk are can be anticipated to include a significant
reduction in premium revenue.
__________________________________________________________________________
Theodore Sprink is a twenty-year senior executive of Fortune 500 real estate and title insurance
conglomerates. Sprink is Managing Director the advisory firm Integrated Growth Strategies,
providing early stage companies with business plans, capital raising, marketing strategies, sales
initiatives and strategic alliances. Sprink, can be contacted at:
www.linkedin.com/in/TheodoreSprink
www.IntegratedGrowthStrategies.com
tsprink@integrated-growth.com
Office: 866-494-3727 Mobile: 760-604-0277