The Hindu Business Line : NIC launching risk cover for property title

Chennai, Aug. 19 Where there is uncertainty and concern, there is insurance. Nobody who has ventured to purchase property has done so without some concern about the validity of the title.

What if some long-forgotten half-brother of the seller pops up and stakes a claim? What if the seller did not at all have a valid title to the property himself? And what if — as many banks have discovered to their horror — the property was being sold on forged documents?

Barring any objections from the Insurance Regulatory and Development Authority in the next 10 days, National Insurance will launch an insurance product to cover the risk faulty title.

The product was filed for the regulator’s approval about 20 days ago and, under the ‘file-and-use’ policy of IRDA, the insurer may launch the product after 30 days after filing, provided there is no query or objection.

The product, common in many countries but launched in India for the first time, will cover risk of faulty or litigated title such as those arising out of suits, disputes of transfer and forgery.

Confirming this to Business Line, the Chairman and Managing Director, National Insurance, Mr V. Ramasaamy, said that the product might hit the market early next month.

Bankers’ interest

He said the company is in talks with many bankers “who have evinced keen interest” in the product. Over time, bankers could insist upon title insurance before they lend for property buys.

“The product will be immensely beneficial,” comments Mr Kapil Wadhawan, Managing Director, Dewan Housing. “It will help us lend to those segments which find it difficult to borrow because of concerns over title, especially in the tier-II and tier-II towns” Mr Wadhawan said.

It is understood that the Karnataka Government has said it would lower the stamp duty by 0.5 percentage points if the transaction is of a title insured property.

The product, to be called ‘NatAl Panchanama Suraksha’, is understood to have been designed by Alegion Insurance Broking Ltd. The Managing Director of Alegion, Mr N. Raveendran, believes that it is possible to earn at least Rs 500-crore of premium in the first year with this product.

Confirming that Alegion was instrumental in designing the product, Mr Raveendran said the company would also be involved in assessing the validity of the title that comes up for insurance.

“We are tying up with a number of law firms,” Mr Raveendran said.

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