NEW YORK, Nov 6 (Reuters) - New York property owners could save as much as $1 billion a year on title insurance if a government run public insurance option were created, state Assemblyman Richard Brodsky on Friday.

The Democrat, borrowing one plank from Congressional proposals for health reform, said state insurance data showed that title insurers in 2007 took in $1.2 billion in premiums. But they only paid out about $55 million in claims, which works out to around 5 percent of their premiums.

"This reform will affect New Yorkers in their daily lives by making it easier and cheaper to buy a home or business," Brodsky said in a statement.

Banks require property buyers to obtain title insurance to ensure there are no ownership disputes, and Brodsky said this line of business was particularly profitable.

"The ratio between the amount collected in premiums and the amount paid out in claims is the highest for any form of insurance," he said.

The list of publicly traded title insurers with New York offices includes: First American Corp (FAF.N: Quote, Profile, Research) and Fidelity National Fidelity (FNF.N: Quote, Profile, Research).

Another advantage of a public option is the extra revenue it would generate -- about $50 million a year -- for a variety of purposes, from affordable housing to road and bridge improvements to property tax relief, Brodsky said.

Iowa has used this sort of system since 1947, after "a series" of title companies went bankrupt, he said.

(Reporting by Joan Gralla; Editing by Diane Craft)