Private Solutions to the Eradication of Poverty: the Role of Title Insurance
In The Mystery of Capital, Peruvian economist Hernando de Soto argued that the absence of clear, transferable title to property was a major hindrance to economic development. He estimated that approximately $10 trillion was tied up in what he called “dead capital”: properties that could not effectively be transferred or used as collateral against a loan. Enabling the poor to access this capital – their capital – is clearly an urgent priority for empowerment and economic development.
One way to improve access to such capital is through the provision of title insurance. The principle is simple: property owners (including mortgage lenders) take out insurance against the risk that there is an as-yet-unidentified claimant to a property; if that claimant materialises and the property must be given up, the insurance pays out. Such insurance offers an alternative to state registration in situations where land titling is incomplete – and where a statutory system might be unduly cumbersome, opaque and/or costly.
Kirthimala Gunasekera will discuss both the theory of title insurance and her experiences developing and implementing such a system in her native Sri Lanka.
Kirthimala Gunasekera is an Attorney at Law and Notary Public with her family law firm and with Nexia Corporate Consultants. She began her career in 1972 at the government monopoly Sri Lanka Insurance Corporation, where she established a title insurance scheme. Working as a junior to former Supreme Court Judge Dr Ranjith Amerasighe, she battled to establish the scheme and issued a policy of insurance to the banks. She worked there for 10 years, until title insurance became very popular.
After a period as Manager Legal of the National Housing Development Authority, Mrs Gunasekera entered private practice, where her duties included obtaining title insurance policies for those who did not have formal title to land. Her work continues to focus primarily on title and title insurance issues. Among other things, she is working with the Women’s Chamber of Industries and Commerce, preparing a web site that provides information for those who do not have formal title on how to prepare documents to obtain title insurance policies for land.