A 25-year veteran of the title insurance industry, Steven Napolitano is the founder of fast-growing First Nationwide Title Agency, with offices in Manhattan and on Long Island. As a former executive with First American Title Insurance Co. and president of that company’s New York division, Napolitano oversaw more than 560 employees in 11 offices, increasing revenues from $50 million to $250 million in less than a decade. Napolitano, a Rockville Centre resident, opened the firm’s Uniondale office with two employees in August 2013 and 18 months later it has 40 people on staff there. First Nationwide will soon double its Uniondale space to 14,000 square feet to accommodate the company’s rapid Long Island expansion.
Exactly how does a title agency determine if there’s clear title on a property?
We go down to where all the records are, whether it be at the county or online now. We go through all the records and we take that information and we put it into a report. We have a reader who reads it, and then a lawyer looks at it.
Have you ever received a claim on a property after the title was cleared? If so, how did it happen?
There was a deal we had done where I’m not sure if the surveyor made a mistake, but there was a question of boundary. The client was buying this property in Manhattan, knocking down one building and putting up this big, giant building. When we got to the point where they were actually pouring the foundation, their neighbor realized that they were a foot-and-a-half onto their property. We actually had to buy that foot-and-a-half from the neighbor in order for them to build and not have to move their foundation. So it was a very expensive foot- and-a-half. We paid for it before it became a claim.
How has the new state licensing requirement affected the title industry here?
I’ve been in the business over 25 years and we’ve always heard that licensing was coming. In my previous life I worked as an underwriter and we were licensed. Our requirements have not changed because we’ve operated our business as if we were licensed. So it’s a good thing for the industry. It makes it a level playing field and makes everybody follow the same rules. It’s a great thing.
Several states have forced title companies to give back millions of dollars in refunds to customers because of kickbacks and excess commissions made by banks, builders and real estate folks. What has changed in the industry to prevent this?
The Department of Financial Services has done a great job and they really have focused on the consumers and that was part of the licensing bill. At the end of the day, what was happening was that nobody was looking out for the consumers. They had all these controlled business arrangements and that paradigm has completely shifted and there are actually penalties for not doing the right thing, which is something that never happened before in the industry. It’s a great thing to have oversight. Independent agents are the way to go. We’re not affiliated with anybody and we’re out there to do one thing and that’s to protect the integrity of the title product.
How does title insurance differ from other types of insurance, such as health insurance or car insurance, when it comes to paying claims?
We are a risk elimination business. In all the others insurance businesses it’s a risk assumption business. They know that they’re going to get claims. They know what their percentage of claims is and they price their product accordingly. We are not an annual premium, we are a one-time premium. We are a risk elimination business, which means we do all of our diligence to theoretically not have any claims. So our labor costs are all upfront to hire the right people to make sure we don’t have any claims. Of course there are always claims. There are always issues like human error; you have fraud. You have other issues that pop up that can’t be underwritten to be eliminated. So we do have claims, but theoretically our job is to make sure that we have zero claims.
What’s the percentage of claims in relation to title policies written?
When the economy gets bad, the claims get higher. In good times, between 4 and 12 percent of all policies have claims, where it could be 50 percent in other types of insurance.
What sets one title insurance agency apart from another?
It’s service. You can get one deal, but unless you make the customer comfortable throughout the entire process and give them good service, they’re not coming back. So service is the most important thing. It’s just about client responsiveness; you need to be there for them and give them a certainty to close and a comfort during the process.
By: David Winzelberg