IRDAI Sets Up Panel to Standardize Title Insurance for Home Buyers in India


IRDAI seeks to develop a standard structure for title insurance which is mandatory for RERA registered projects. Title insurance provides compensation to developers and subsequent buyers of the property against losses due to title defects resulting from disputes by third parties.

At present, the issue of ownership or title is a large-scale problem in the real estate market. However, the decision of the insurance regulator will be useful to long-term homebuyers.

According to the Ordinance of the Insurance Regulatory and Development Authority of India (IRDAI), dated October 1, 2019, “Title insurance products are currently only offered by a few general insurers in the Indian market. However, the characteristics of each insurer’s products vary by policy. terms and conditions, extent of coverage, etc., depending on the support received from their reinsurers. It should be noted that the number of title insurance policies sold is minimal despite the availability of the product for a year and a half and the obligation imposed under Article 16 (1) of the Real Estate Law of 2016 ( regulation and development) requiring the promoter / developers to obtain said policy. Comments received from the Indian government reveal that stakeholders, in particular developer associations, have signaled the need for standardization in title insurance products ”

According to the circular, IRDAI has set up a working group (GT) to review the product structure of title insurance. The WG consists of a team of 12 members which includes representatives of general insurance companies, the Real Estate Regulatory Authority (RERA) and IRDAI. The WG must submit its report within 12 weeks from the date of the order.

The terms of reference of the working group are as follows:

  • Examine the legal and regulatory framework in place and its impact on the commercialization of title insurance in India.
  • Study the structure of title insurance products available in the current Indian market and analyze the reasons for the weak demand.
  • Develop a standard title insurance product suitable for the Indian market and recommend measures to stimulate demand for the product.
  • Propose an increase in reinsurance capacity on the domestic market.
  • Examine any other aspect relating to title insurance products in India.

What is title insurance?

Title insurance is indemnity insurance. Essentially, it provides compensation to developers and subsequent owners of the property against losses and risks associated with defects in title to the property. It even covers issues that aren’t discovered until the policy start date.

How Title Insurance Help Home Buyers

While title insurance may not be available to buyers of individual land, it will still be beneficial to the company’s home buyers. Indeed, when the title insurance policy is purchased by a builder by paying the amount of the premium, it must then be transferred to the association of beneficiaries of housing companies, who are the ultimate beneficiaries of the policy.

In the event of a future claim by a third party, title insurance can be invoked and can compensate all buyers for the damage they have suffered. All defense or legal costs incurred, including any out-of-court settlement, are covered by the policy. This is in addition to a written affidavit that a builder must provide to RERA that the legal title to the land on which the development is proposed contains legally valid documents with authentication of that title if the land is owned by another person.


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