Update On “Force-Placed” Insurance In California

In a previous post, this blog explained what “force-placed” insurance is and how insurance companies and banks use it to charge consumers high rates, usually for a car or a home. These imposed insurance policies are intended to protect the money-lender but often come with exorbitant rates much higher than standard insurance rates for the same car or property. California insurance officials are, according to a recent story, continuing to pursue reform of the force-placed system and trying to obtain more reasonable rates for customers assigned this insurance.

Officials managed to pressure QBE Insurance into cutting force-placed insurance rates by 35 percent. And Great American Assurance Company reduced force-placed rates by 28 percent as part of its mortgage protection program. California Insurance Commissioner, Dave Jones, noted that the former will save $19.4 million annually for policyholders and the latter will save $1.26 million annually. The average consumer savings under QBE’s reduction will be $626 and $505 annually for Great American Assurance customers. This is after the October success of convincing Assurant to drop rates by 30.5 percent. Some analysts, such as John Nadel at Stern Agee and Leach in New York, think that California may now push Assurant to lower their rates even further after the recent news about other insurance companies.

About the most recent rate reductions, Commissioner Jones said, “This is another victory and significant rate reduction for many California homeowners who have been subjected to these types of policies.” The new QBE rates will go into effect on March 15 and currently affect 30,940 properties in the state of California. The Great American Assurance Company rates start on March 1 and affect 2,512 California policies.

These latest rate cuts and push by California officials comes alongside a nationwide effort to gain control of force-placed insurance. California got moving on the issue last spring with discussions of the excessively high rates and direction from the Department of Insurance to review the rates. On the federal side, recently, new regulations came into force by the Consumer Financial Protection Bureau. Hearings investigating this issue have also been held in New York and Florida. Fannie Mae, the troubled mortgage giant, has also pushed for new companies to enter this market, such as foreign insurers, to increase competition in an effort to help troubled homeowners.

San Francisco Insurance Attorneys
While these steps to rein in force-placed insurance in California are positive developments, it does not change the fact that insurance rules and regulations can be confusing and make you feel like you are battling the whole system. It can be particularly frustrating when dealing with expensive insurance that is forced on you by a lender. Regardless of the type of insurance, when you pay for benefits and coverage, you deserve for that assistance to be there when you need it most. An insurance attorney can help you understand your case and what your legal options are, so contact the Brod Firm today.