Well, very long faces all around the table. Title insurances pretty much have a monopoly in California -- they do most of the title transfers (which they charge for) and refuse to do so if you don't buy insurance from them.
I read up on it and technically I can transfer title without them, and should have no trouble finding a lawyer to help me...but all the folks involved live locally and it doesn't pay to piss them off (I later bought more property around town). So...I paid.
In the USA and most developed countries, we already do have a "proof of a chain of ownership". And, we've had it for hundreds of years. For example, the title deeds and transfer of title documents saved at the county courthouse.
The issue is whether the so-called "proof" is : authentic or forged, and/or conflicting with other prior claims. (E.g, is the title transfer document faked? Are the signatures from the real owners? Was the previous person who transferred the title the actual rightful owner?)
Ultimately, "proof" of ownership is a social consensus that sorts out the claims and converges on agreement of who owns what. (I made a previous comment about this.[1])
You might notice that "proof" is recursive: if we "prove" that the "proof" was valid, how do we know that proof is valid? Well, things like "title insurance" and/or a court case with a judge/jury to render a final judgement is the process to break that infinite cycle of "proof of proofs".
My deeds, dating back to 1949, no longer exist. They were shredded by Nationwide. I have a certified copy but they are considered of academic interest and 'proof of ownership' is now recorded by a database row. Which is terrifying, as a simple clerical error or a system failure could ruin so many lives.
If proof is electronic, you have no recourse if computer error causes a dispute, since you do not hold any proof yourself to present as evidence!
Between tax and debt liens, fuzzy property boundaries, overlapping property addresses (there are two different pieces of property that use my address, only one of which I own) there are all sorts of weirdnesses that can result in uncertainty.
(Disclaimer: not in real estate at all, so I'd imagine I'm just scraping the surface of oddities.)
Without this principle, no ownership would ever be clear because there would always be the possibility that someone could show up later on and prove they're the real owner. It basically says that, after some point, the status quo rules.
That's what the insurance is for. Even with the technology the insurance would still exist because it's silly not to buy the insurance. You are protected if the title company screws up with title insurance. In the future insurance would protect you from the "title chain" having bad data.
However, mistakes or fraud can happen. Surveys can be wrong and not noticed. Someone can steal someone’s identity.
Basically because the relevant governments are too incompetent to organize that, and/or are lobbied by title insurance companies to perpetuate the status quo.
It costs like 1/2 of a percent of the property value.
That is how YOU pay because of shenanigans like in this article.