Reform-minded New Mexicans who thought they'd seen the last of the crusading Rep. Max Coll when he left the New Mexico Legislature, will be happy to known they're wrong.
He's back -- in excellent bipartisan company -- to take on one of our state's better hidden monopolies: the title insurance companies.
On behalf of Democrat Coll and his wife Catherine Joyce-Coll, Albuquerque attorney Victor Marshall, who served eight years as a Republican state senator, filed a class-action lawsuit Wednesday to stop price-fixing and price-gouging by those companies. For good measure, he named officials of the state Public Regulatory Commission and its insurance department as defendants.
They've violated New Mexico's insurance statutes by fixing prices that are excessive and unreasonable in relation to the risks insured, says the complaint. As a result of their actions, New Mexico consumers pay more for title insurance than those of many other states: roughly $1,750 for title insurance on a $300,000 home in New Mexico, while a similarly priced home could be covered for just over a $1,000 in Colorado Springs and $1,200 in Phoenix.
For their home in Santa Fe, the Colls had to pay $2,430 for title insurance in 2003. Then they had to pay an additional $2,407 when they refinanced -- and, under current rules, there's no shopping around.
And, as the lawsuit notes, for every dollar in premiums that title insurers collect in New Mexico, they pay out less than 5 cents to policyholders to cover claims.
In other lines of insurance, such as automobile and health, companies are allowed to compete on rates -- and insurers pay out more than 70 cents for every dollar of premium that they collect.
Coll, never one to mince words during a distinguished career in the Roundhouse, says "The deep dark secret is that title insurance companies pay out next to nothing to their policyholders."
The lawsuit seeks to tell New Mexicans how much money title insurers actually pay out to policyholders.
Marshall, who delights in legal and political history, dug up such documents as state constitutions dating back to the early days of the American Revolution, whose fighters were still bristling at monopolies such as the Massachusetts Bay Company and others chartered by the British crown. Maryland's founding fathers, for example, called monopolies "odious."
Such views showed up in the organic act creating New Mexico as a territory of the United States -- and carried over to our voluminous state constitution.
In spite of constitutional commands to enact laws preventing "trusts, monopolies and combinations in restraint of trade," state regulators, hand in hand with companies they're supposed to be regulating, have done just the opposite. So what we have are rules saying all companies must charge the very same price for title-insurance policies. Makes you wonder where Max was in days of yore.
The response -- from the regulation commission and from the title-insurance companies it's supposed to regulate -- is predictable: We're acting in the best interests of the consumers, who would only be confused by the complications of the title-insurance market if it were freed of regulations ...
They might be able to fool some of the people all of the time, and the rest of that Lincolnian dicho -- but they can't fool Max Coll and Victor Marshall any of the time. Nor, do we suspect, will they slide anything past any but the most obtuse of our judges. But New Mexicans can expect a lot of righteous stammering and sputtering from an industry long left alone to cook up sweetheart deals under the cover of a less-than-zealous commission of regulators.
Lawyers for the PRC and the title companies no doubt will be well paid for what they produce by way of a defense. We're betting they'll sweat for every penny of their fees.