In calculating the financial condition of a title insurer, what is the maximum percentage of surplus to policyholders that can be attributed to title plants?

In determining the financial condition of a title insurer, regulations set specific limits on how much of the surplus to policyholders can be attributed to title plants. Title plants are essential for the operations of title insurers as they consist of records that provide the basis for title examinations.

The correct answer indicates that a maximum of 20% of surplus to policyholders can be attributed to title plants. This percentage ensures that while title plants can significantly contribute to the resources of a title insurer, they do not overstate the financial condition based on a single asset category. By having this cap, regulators ensure that the insurer maintains a balanced approach in its asset allocation and provides protection to policyholders.

Understanding this limit is crucial for anyone involved in title insurance, as it reflects the importance of regulatory frameworks in maintaining the solvency and financial health of insurers, ensuring that they can meet their obligations to policyholders.