Title Insurance, Blockchain, and Reality

A reader points me to this report from Goldman Sachs, from last year, on applying Blockchain to title insurance.

We estimate that blockchain could drive cost savings of approximately $2 – $4bn as a result of reductions in headcount and actuarial risk. We believe blockchain could streamline the manually intensive process of property title search, introducing significant headcount cost savings into the system. In our base case, we estimate that blockchain could drive $2.3bn in headcount savings, primarily driven by a 30% reduction in fixed headcount personnel in search & examination as well as abstract and curative functions, combined with a 20% reduction in variable expenses from agent commissions and sales & marketing

The obstacles to a better title system have nothing at all to do with technology.

1. You could get most of these savings without any technology, just by switching to a Torrens title system.

2. The number of Congressmen willing to risk re-election to improve the title system in any way? 0

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8 Responses to Title Insurance, Blockchain, and Reality

  1. collin says:

    Well, we have seen healthcare records also fail as well. So it is probably a simple POV that nobody has figured out here to profit from the changes.

    Also, aren’t these mostly state and local issues? So in reality, the Federal government really does not have much play here and most Republicans would shout against the Federal Government taking it over. (And it is likely a single entity with economies of scale would probably be the best choice here in the long run.) And aren’t State and Local government more prone to crony capitalism?

    • Handle says:

      Health records are notoriously hard to fully digitize. The Coast Guard just recently abandoned their latest, expensive effort.

      • Tom DeMeo says:

        They really aren’t. They are notoriously hard to normalize (in database speak sense of the word), but there is little to no reason anything on paper can’t be online in a document management system that is more usable than paper records.

        The primary problem with medical records is that they aren’t patient data, they are provider data. Providers are at best indifferent and at worst hostile to composing and assembling data in the service of the patients. They see that data as theirs.

        • A Leap at the Wheel says:

          I think the primary problem with EMRs is that providers get paid per procedure and they aren’t subject to competition from outside of the medical field. Since they are paid by procedure, they aren’t incentivised to innovate in organization efficiency but instead to innovate in providing the most number of procedures per visit/hour. EMRs don’t help that.

          And they are subject to outside innovation because its illegal to start over from the ground up operating under a completely different set of technological assumptions (a la Uber vs taxis todays, or shopping malls vs retail districts years ago when suburbia + automobile changed the travel abilities of families)

  2. Tom DeMeo says:

    As Collin said, this is a state issue.

    I also don’t see this as a particularly risky issue politically. There is a small group of special interests that earn money from this stuff, but the conversion process will produce a windfall of work for decades, so they may actually support it.

    I’m pretty sure that the reason this isn’t done is the gruesome process of getting from here to there. The deed system does not require the resolution of property rights between competing claims. Titles set those rights in stone.

    It will not save any money for a generation at least. It will cost an enormous amount of money. Surveys will be required, and legal disputes must be resolved.

    The only rational way to do it is to run both systems for 2 or 3 decades, and require a conversion from deed to title, one property at a time, each time a property transaction occurs. Even this approach is problematic. Does that force all abutters to lawyer up?

    At some point, it will be cheaper to convert the remainder even if no transaction is required.

  3. PJ Glandon says:

    The report mentions an adoption timeline of 5 to 10 years. I wonder how much Goldman would bet me that half of their projected savings will be realized within a decade…

    • collin says:

      The report mentions an adoption timeline of 5 to 10 years.

      Judging by implementation of most corporate IT projects, it is wise to double an adoption time frames. So this process would take 10 to 20 years until we would see savings. So unless Goldman Sach, JP Morgan, and Chase bankroll this huge change then this ain’t moving.

      I think Arnold Kling has his answer!

  4. Handle says:

    I’d love to see a ordinary county district judge try to adjudicate some typical land dispute based on claims about blockchains. “Oh I forgot my password” or it was stolen, or I was hacked, or my wife used it without permission, or there was some springing conditional interest from a widow a generation ago, or an adverse possession case, etc.

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