Insurance Commissioner Dave Jones on Thursday announced today a 35 percent rate reduction for lender-placed homeowner’s insurance coverage offered by QBE Insurance Corp.
The rate reduction will result in an estimated $19.4 million savings to QBE policyholders, with an average savings of $626 per policyholder annually.
“This is another victory and significant rate reduction for many California homeowners who have been subjected to these types of policies,” Jones said in a statement.
The California Department of Insurance received complaints from homeowners being forced into lender-placed policies at exorbitant prices, and Jones directed insurers to submit new rate filings, according to a statement issued by Jones’ office.
A subsequent review of those filings, confirmed that rates were indeed excessive and needed to be lowered. A second insurer, Great American Assurance Co., has also reduced its lender-placed insurance premiums by 28 percent in its Mortgage Protection Insurance Program. That reduction will save California policyholders $1.26 million annually.
In October, 2012 Jones announced a $42.7 million savings to homeowners by American Security Insurance Co., an Assurant Inc.-owned company. That premium reduction was 30.5 percent and translated to an average savings of $577 per policyholder in California. Following that announcement, another insurer, American Modern Home, reduced their lender-placed premium rates by 21.3 percent, saving an additional $1 million for consumers, according to CDI. That reduction, which was tied to an earlier reduction of 10.5 percent by the insurer, saved individual policyholders $604 on average annually.
In March of last year, Jones contacted the state’s largest lender-placed coverage insurers to express concerns about apparent excessive rates, and he directed insurers to submit new rate filings with CDI to determine if rates could be reduced. CDI examined the insurers’ annual financial statement data, and found many cases of low loss ratios, according to the department.
“With an estimated 2012 gross written premium of $62.8 million, QBE and Great American Assurance are to be commended for being the third and fourth insurance companies respectively to lower their rates,” Jones said.
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