Real Estate Malpractice Insurance Report ( 2.13MB)

This report summarizes Missouri real estate malpractice data for 1999 to 2008.  The charts, graphs and tables are limited to closed claim information and were constructed from data collected by the department as required by Section 383.060 RSMo.  The premium and loss data are presented in the final section.  The data were obtained from the Missouri Page 19 Supplement to the companies’ annual statements.

In 2008, real estate malpractice insurers incurred claim losses equal to 60 percent of premium, and paid defense costs equal to 59 percent of premium.  Together, losses plus defense costs totaled 119 percent of earned premium.  This figure totaled 161 percent over the past five years, and exceeded 230 percent over the prior ten years.

In 2008, 89 claims against realtors were closed, of which 18 were closed with payment.  Claim payments averaged $11,802, while defense costs averaged $9,476.  Over the last ten years, insurers paid claims totaling $5.6 million, and defense costs equal to $3.8 million.  During the same period, 691 real estate malpractice claims were closed in Missouri - of these 23 percent resulted in a payment.   The number of claims closed in 2008 (89 claims) was significantly lower than ten-year high in 2005 (124 claims).

In Section II, indemnity amounts are categorized by claim characteristics, including: 

• Area of real estate in which the claims were filed.
• Major activity in which the agent was engaged when the alleged error or omission occurred.
• Alleged error or omission that was the most significant reason for the claim.
• The legal disposition of the claim at the closing date.
• The number of years the insured had been in practice at the time of the alleged error or omission.
• The relationship of the insured to the claimant.

Six companies reported writing real estate malpractice insurance business in Missouri during 2008 with Continental Casualty Company commanding 70% of the market.

This report was compiled using information submitted by the insurance companies.  As a result, the accuracy of this report is dependent upon the accuracy of each company’s data.  Copies of this report will be made available in braille, large print or on audio cassette upon request.  Questions regarding this report should be directed to the Statistics Section, Department of Insurance, Financial Institutions & Professional Registration, P.O. Box 690, Jefferson City, Missouri 65102-0690.