Tuesday, March 13, 2007

Title Insurance Update

I've posted a couple of times in the past (see here and here) on ARIS Insurance, which has been trying to market title protection insurance for works of art, along the lines of real estate title insurance. Long Island Business News reports that they've made at least some progress: Uniondale-based Liberty Title Agency, which specializes in real estate title insurance, has started a new division, Liberty Art Title Agency. It still appears that the next policy ARIS writes will be its first, however: the article says that, "since it went live in May, ARIS has researched 20 submissions, three of which should turn into deals."

I remain concerned about the adverse selection problem. As Landes & Posner put it in the article I cited in the first of the two posts linked above:

"Insurance companies normally insure against the risk of something happening in the future rather than against the consequences of something that has already happened. The insured is more likely to know the past than the future and so more likely, in the case of insurance against the consequences of something that has already happened (such as a thief in the chain of title), to be exploiting information known to him but not to the insurer. Title insurance in real estate is only an apparent exception, since all the title insurer insures against is the risk of its having failed to conduct a thorough search of the public registry of real estate titles."