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Concept of title insurance in India has been on sidelines for long. In an interview with Sanjay Vijayakumar, Sameer Dhanrajani, country head of Fidelity National Financial India, says once the insurance bill is passed, the firm would be keen on setting up shop in India and that title insurance would change the landscape of realty industry. Excerpts:
Why there is a need for title insurance in India?
Title insurance is one of the key areas to be looked at when buying into the Indian real estate market. Data from property bought over the last 100 years show a lot of challenges in terms of title and bad loans. Our knowledge shows that there is a definite need for title insurance in India to safeguard the interest of the consumer.
What is the current scenario?
Title insurance concept is not there in India and it requires regulatory approval. A bill has to be passed in parliament. Title insurance firms have to set up shops in India, which would be in partnership with financial institutions, investors or the banks. Once the bill is passed, the firm, having 48 per cent market share in the US, would definitely look at setting up operations with a joint venture partner.
What are the features of title insurance?
Title insurance is a one-time premium policy, which is issued to anyone interested in buying or selling property. This is required to ensure that title of the property is safe and kind of conducive for any future transactions.
What is the process involved in taking a title insurance?
In the process of title insurance, a set of parameters needs to be established such as to who all have been the owners of that property for the last 10-15 years. A detailed mapping of the infrastructure, land and the property needs to be done. There are also set of clear documentation database of the property such as history of a particular property's owners and the payment mode for that property. Any kind of bad debt associated with that property also needs to be checked. After a thorough audit, the policy is issued to the consumer. Our model in the US can easily be replicated in India as well.
Whether the insurance pertains to single property or a group?
It would pertain to a particular property. Only consumers, who are keen on taking the policy, would be entertained.
After the policy is taken, what is the onus on the insurer?
Once the policy is issued, the company, which issues the policy is liable to reimburse the entire loss suffered due to any conflict arising on the title of that property. Real estate is not an open transparent mechanism and title insurance would go a long way in protecting the interest of consumers.
What is the background work required?
A lot of manual work is done in terms of land record in India, which needs to be digested and put into an automated system. We have a proprietary automated system, which captures these records in sequential manner.
What are the opportunities you see in title insurance?
A lot of salaried people are thinking twice whether the land is safe, especially in case of farmlands, where the buying is low despite prices being reasonable and cheap. Title insurance will change the landscape of the real estate market.
What are the challenges?
Digitisation of records with lot of manual intervention is a challenge in India. Many states have already the process. There is a land record bill that has to be passed, which would earmark Rs 50,000 crore for automation of land records. Meanwhile, the real estate players operate in different ways and they need to fall in line.
What will be your target segment?
Both residential and commercial real estate transactions across India. Government promoted SEZs and software parks would also come under the purview of title insurance.
Source: http://www.mydigitalfc.com/
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