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Commitment and Policy Issuance Procedures: Policy Amount Limitations

Notice of Substantive Change - Effective March 1, 2010

TO: ATG Members and Agents
FROM: Donna Kogut, Managing Attorney, Commercial Title Services

Arden Miner, Senior Manager, Escrow and Underwriting
DATE: March 2, 2010
 
Today, under ATG Administrative Regulation No. 4 B, members are required to obtain written authorization from ATG's legal staff prior to issuing an ATG commitment or policy in the amount of four million dollars ($4,000,000) or more. This is because ATG must obtain written authorization from its reinsurer prior to authorizing the member to issue these commitments or policies. For policies with an effective date on or after June 1, 2010, that amount changes to three million dollars ($3,000,000).

It is imperative that written authorization is secured from our reinsurer in order to ensure coverage in the event of a claim. If that authorization is not obtained through the act or omission of the member, the member shall be strictly liable to ATG for any loss or damage resulting from the issuance of the commitment or policy.

Effective immediately, please send any commitments with exposure in excess of $3,000,000 to the legal staff so we can obtain approval before the closing. You can contact the ATG Underwriting Department by calling 312.752.1990.

There has also been a change in ATG's reinsurance agreement with First American. Effective March 1, 2010, ATG's risk retention increased from $500,000 to $700,000.

The issue of reinsurance often arises in commercial transactions. Commercial title rates are significantly less than residential title rates, and many times are bid rates. ATG agents have the ability to write commercial transactions on First American paper through ATG as the agent of First American where the reinsurance costs will not be applicable and the fees paid may be less. In commercial transactions, the agents compensation is based upon a net premium, after all costs of reinsurance and agency are deducted.

Please contact the ATG Commercial Title Services department at 800.252.0402 and we will help you assess the most beneficial manner to structure your commercial transaction.

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