Past Problems
Interest in collateral protection insurance increased in the late 1980s when, in response to a bank crisis, regulators recommended that assets securing loans be insured and, if borrowers did not obtain insurance, that lenders obtain CPI. The rise in CPI activity generated by this recommendation also coincided with a number of consumer complaints, including suits from borrowers.
Borrower lawsuits were often prompted by lenders’ providing inadequate disclosure regarding the right to force-place CPI policies, force-placing policies with unnecessary coverages, and not disclosing they might be making a commission on the transaction. Additionally, some CPI providers had administrative problems with their programs, including the inability to receive and process insurance documents in a timely manner and ineffective tracking technology. These problems resulted in sending unnecessary letters to borrowers, issuing policies to borrowers who were in fact insured, and delays in processing premium refunds when proof of insurance was received, all of which served to exacerbate borrower complaints.
Read more about this topic: Collateral Protection Insurance
Famous quotes containing the word problems:
“The problems of all of humanity can only be solved by all of humanity.”
—Friedrich Dürrenmatt (1921–1990)
“Our young people are diseased with the theological problems of original sin, origin of evil, predestination, and the like. These never presented a practical difficulty to any man,—never darkened across any man’s road, who did not go out of his way to seek them. These are the soul’s mumps, and measles, and whooping- coughs, and those who have not caught them cannot describe their health or prescribe a cure. A simple mind will not know these enemies.”
—Ralph Waldo Emerson (1803–1882)