Alfred Reid, Anglican Bishop of Jamaica, during a press briefing last week to announce plans for today's arrival of Archbishop of York, John Sentamu.

NEM, the insurance firm owned by Jamaica National Building Society (JN), is today launching a land title insurance product. NEM and its partners in the venture say the product will unlock value in what many would hitherto have thought to be an untradable asset.

At the same time, they expect the move to give fillip to Jamaica's real estate sector, where developments are often delayed because of problems with land titles and proof of ownership as well as the country's slow approval systems.

"This will boost the speed and efficiency of the transaction process and enable more people to benefit from home ownership," JN's general manager, Earl Jarrett, told reporters yesterday. "Conveyance is often cumbersome ... This will help to bring uniformity to the process."

Against costly defects

With this product, developed on the initiative of Caribbean Land Title Ltd - a new full-service risk assessment outfit led by CEO Garfield Knight - NEM will provide insurance to mortgage lenders and property purchasers against costly defects or other problems with title for land.

Purchasers will be covered to the full purchase price, while lenders will be insured on the basis of the reducing balance of the value of the mortgage.

One-time sum

The premium, according to NEM's acting general manager, Chris Hind, will be a one-time sum of 0.6 per cent, in the case of the purchasers, of the value of the property.

For the mortgage provider, it will be 0.6 per cent of the value of the loan.

NEM will reinsure the risk with First American Title Insurance, a subsidiary of giant US insurer, First American Insurance Company.

"Caribbean Title has the job of of satisfying the insurance (of the quality) of the risk," said Knight, a management information systems specialist, who formerly served on the boards of the National Land Agency and the National Housing Development Corporation.

While NEM as the insurer and JN as mortgage provider are the initial players in the market, Knight explained that the services of his company as a risk assessor would be available to other insurers and financial houses offering title insurance.

Jamaican use

The scheme is expected to be particularly well used in Jamaica, where it is estimated that there are more than 3,000,000 parcels of land without titles. Many Jamaicans pass land down through families, without the transfer ever being formalised by way of a title.

The upshot is that while an individual may have wealth in the form of land, it is usually difficult to unlock as the land is difficult to sell or to be used to support loans.

"Before the introduction of the title insurance in Jamaica, common law property was an asset you could not bring to bear as collateral," said Hind.

business@gleanerjm.com