"They (buyers) will have to prove that they have done their due diligence before we offer the product," said an executive at NIC who did not wish to be identified.
Title insurance is basically protection against financial loss from real estate transactions arising from defects in the "title" or "ownership" of the property.

NIC was among the first Indian companies to consider a title insurance product last year, after the Karnataka government decided to give a half percentage point (or 50 basis points) discount in stamp duty to property buyers who opt for title insurance.

In response to its submission, Irda has asked the firm to resolve issues pertaining to pricing. The company will resolve these issues and file the product in two months, added the NIC executive.
"There are some issues regarding the pricing of title insurance products," said R. Kannan, member, actuary, of Irda. "Being long-term products of around 10-15 years, companies need to have proper risk mitigation tools in place before launching such products," he said.

Irda and the firms would not speak on when these products would be available.

Pricing and risk management are key issues for companies launching title insurance products because of paucity of data on the likelihood of somebody contesting a claim to property. The companies will likely test their products in states where not too many title claims are contested before launching them nationally.

"Unlike vehicle insurance, where we know the ratio of accidents in different cities and price the products accordingly, in property there is absolutely no reliable data to go by," the NIC executive said.

"You have to see how it goes and then tweak the premium accordingly. For example, if there have been no claims for five years, then the premium would be reduced," the executive added.
"The Indian market does not have any similar product to compare with. However, the premium is likely to be in the range of 0.5-2% of the total sum assured," said Anuj Gulati, director, ICICI Lombard.