Title insurance is part of a weird subsidy that is US-unique. The fact that it's part of a weird subsidy means the terms are subject to politics. Fannie/Freddie can easily self-insure against title risk but the political winds are against it, though maybe recent developments will allow them to finally do this [0].
I don't think you've quite understood the idea of looking at loss ratio. On the aggregate, title insurance is incredibly expensive compared to home or auto insurance.
These bits of friction add up over an entire market, especially in states where title insurance is fixed by regulation at an extraordinarily high price.
The weirdest thing I've found about title insurance is that people who have purchased it come out of the woodwork to try to convince themselves they weren't scammed. It's not just title insurance salesmen astroturfing; people honestly just never want to admit they were scammed and will somehow fight tooth and nail against cold hard mathematical facts.
On that note, I can also offer you rapture insurance for $10/lifetime! That's cheaper than even a day of your homeowner's insurance and it's a one time purchase! By your logic, this insurance is therefore a good deal and totally not a scam!
[0] https://subscriber.politicopro.com/article/2023/03/fannie-mo...
