A second writer of lender-placed homeowners insurance has lowered its rates in California by 21.3%, according to the California Department of Insurance.
According to papers filed with the state, American Modern Home Insurance Co. will see a premium change of $2.4 million from the decrease. American Modern's lender-placed program, which falls under commercial fire coverage, has total premiums of $11.4 million and 2,274 policyholders.
California Insurance Commissioner Dave Jones earlier this year called upon writers of lender-placed insurance, which is also known as force-placed insurance, to reduce rates. He said prices for the coverage were excessive and the profit margins too high.
American Security Insurance Co., which is a subsidiary of Assurant Specialty Property, in October became the first writer of lender-placed insurance in California to reduce its rates. The company's rates were cut by 30.5%. American Security's program has about 74,000 policyholders, according to the insurance department.
American Modern earlier this year reduced rates on the program by 10.5%, according to state records and the insurance department. The two rate cuts combined will lower consumer premiums by about $604 per year, the regulator said in a statement.
American Modern Home Insurance Co., part of the American Modern Insurance Group and ultimately owned by Munich Reinsurance Co., is one of the top 10 writers of lender-placed homeowners insurance in the state, according to the insurance department.
Regulators in New York have also targeted lender-placed insurance programs and held lengthy hearings in May about the cover. Following the hearings, the New York Department of Financial Services directed three companies that write the line to lower rates. Those three companies were American Modern, American Security and QBE Insurance Corp.
American Security Insurance Co. and QBE Insurance Corp. currently have a Best's Financial Strength Rating of A (Excellent). American Modern Home Insurance Co. is rated A+ (Superior).