New York regulators urged to be examples in the fight against controversial insurance practice
The Consumer Federation of America (CFA), a consumer advocacy group, has called upon New York insurance regulators to tackle the issue of force place insurance for homeowners. The New York Financial Services Department has been holding public hearings concerning a number of issues of importance in the state. During one of these hearings, CFA Insurance Director J. Robert Hunter petitioned insurance regulators to take a stand against the controversial practice of force-placed insurance and become national exemplars on the matter.
CFA campaigns to make the practice less lucrative for those using it
Force-placed insurance refers to insurance policies that are purchased by lenders or creditors and used to protect the assets of a consumer who did not purchase insurance coverage themselves. The costs of these policies are usually passed down to consumers despite the fact they did not purchase the coverage. Forced-placed insurance has become a controversial issue in the insurance industry because many consumers consider the practice to be unfair. Advocacy groups like the CFA have been campaigning for lawmakers and state officials to make changes to insurance regulations to prevent this practice from prevailing into the future.
Public hearings draw calls for action from the CFA
During a public hearing held by the state’s Financial Services Department, J. Robert Hunter likened force-placed insurance to the insider trading seen in the stock market. Hunter claims that this act has led to “unjustifiably high home insurance rates charged to some consumers.” The CFA is not urging state regulators to consider taking a stricter stance on the matter and prevent lenders and insurance companies from putting this practice to use.
Implications of apathy may have encouraged force-placed insurance
The CFA claims that New York residents are paying too much for homeowner’s insurance. The organization notes that insurance regulators are not the only ones that have not taken action against this practice. Hunter notes that the state’s banking regulators have also failed to take action against force-placed insurance. This apparent apathy from state regulators may have encouraged the practice to spread at a fast pace.
