Insurance Commissioner Dave Jones has spoken with the 10 biggest insurers providing “lender-placed coverage” California insurance, in order to address a number of concerns that have been brought to his attention regarding excessive rates.
Within that communication, Commissioner Jones directed that a California Department of Insurance (CDI) rate filing be made in order to lower their rates. The insurance commissioner too this step at a time when reports have been made quite heavily regarding sketchy financial integration between insurance companies that offer “forced-placed” mortgage insurance, and the mortgage lenders themselves.
CDI was directed by Commissioner Jones to look into the annual financial statement data of the insurance companies, and the result was that CDI determined that there were low loss ratios. This suggests that the rates being charged by those insurers could be excessive. The Commissioner directed the insurance companies to provide CDI with a response to these findings by April 1, 2012.
Jones’s decision was considered to be especially important considering the increasing number of homeowners within the state who are drowning financially from “underwater” mortgages and whose lenders are “force-placing” coverage.
According to the Commissioner, he has heard the complaints of homeowners who are being required to pay for the California homeowners coverage that has been purchased on their behalf by their mortgage lenders, but at prices that are much more steep than the premiums that they would have been able to find on their own. He called it “yet another facet of lender practices associated with the mortgage crisis.”
