In an effort to facilitate the process and perhaps demystify the issues
surrounding the topic of reinsurance, this Bulletin will both provide some
basic information as to why and when reinsurance is required in connection with
any given transaction and introduce our more concise Reinsurance
As you may know, any title
insurance company is limited as to the amount of liability it may assume in any
single transaction. This is commonly known as a “single risk retention limit”.
That amount, for each insurer, is determined in one of two ways. First, there is
a mathematical formula, mandated by statute, that uses certain financial data of
the company and the resultant calculation is the single risk retention limit for
that company. Alternatively, a company may choose to impose a single risk
retention limit upon itself that is less than the amount that may result
from the statutory formula. Here at STIC, we have a self-imposed single risk
retention limit currently set at $13,000,000.00.
Please note, however, that this
does not mean that STIC is limited to issuing policies of no more
than $13,000,000. Subject to underwriting approval, any STIC office may issue
its policy in excess of that amount, provided that the reinsurance issue is
Reinsurance becomes necessary
in one of two ways. Either a company is asked to issue a policy in an amount in
excess of its single risk limit or, an insured mandates that any particular
insurer can only assume a certain amount of a given risk (which amount could be
less than what a company may normally hold) and, in either case, the excess
liability must be reinsured with another company. In most cases, STIC will look
to Stewart Title Guaranty Company to place its reinsurance. This is a relatively
simple process, somewhat routine, however, it must be stressed, it is also an
absolutely necessary prerequisite to the issuance of any policy with a liability
amount over our single risk limit.
To reiterate the procedure, in
any instance where your office will issue its policy in amount in excess of
$13,000,000, please advise this office as follows:
A Reinsurance Questionnaire, a copy of which is
attached for your use and reference, must be completed and sent to Anne
Minichino, Reinsurance Administrator, prior to closing. The form should be
accompanied by a copy of the report of title or proposed policy to be issued
in connection with the transaction. If necessary, the form may accompanied by
a separate writing containing any additional details of the transaction,
including, but not necessarily limited to, the existence of any unusual risks
which may pertain.
If the amount of insurance requested exceeds your
office's underwriting authority, a Policy Approval Form must also be submitted
and approved. That form, together with a copy of the title report should be
submitted to Margaret T. Ling, Esq.
Copies of final policies, together with all
endorsements, are to be submitted to the Reinsurance Department as soon
possible, once the closing has been completed. Please note that this request
for a copies of polices is in addition to the copies submitted with your
This procedure is also to be followed in cases where the
amount of insurance requested is less than $13,000,00 but the insured
nevertheless requests reinsurance.
have any questions at all regarding the procedure, the completion of the forms
or any other aspect of our reinsurance requirements, please do not hesitate to
call. Thank you for your anticipated cooperation.