California is continuing its efforts to reduce the cost offorced-place insurance, pressuring QBE Insurance Corporation toreduce its rates by 35 percent effective March 15.

At the same time, California Insurance Commissioner Dave Jonessaid a second insurer, Great American Assurance Company, has alsoreduced its forced-place insurance premiums by 28 percent in itsMortgage Protection Insurance Program.

The QBE rate reduction will result in an estimated $19.4 millionsavings policyholders, with an average savings of $626 perpolicyholder annually, Jones said.

The Great American reduction will save California policyholders$1.26 million annually, Jones says. 

The two actions are part of a trend by federal and stateregulators to force reductions in homeowners-insurance rates paidby consumers after their standard coverage lapses.

These actions include new regulations on forced-place insuranceimposed last week by the Consumer Financial Protection Bureau and arecent push by the Federal National Mortgage Association, thefederally controlled and troubled mortgage lender.

Investigative hearings have been held in New York and Florida onthe issue, and the National Association of Insurance Commissionershas also held hearings in addition to seeking a nationwidere-examination of insurance-department policies.

Fannie Mae is pushing to persuade new entrants into the market,including foreign-based insurers, as part of an effort to reducethe cost of homeowners insurance on troubled properties itinsurers.

The recent Calif. department announcements followed anannouncement Oct. 24 by Jones that Assurant had agreed to a 30.5percent reduction in rates charged for force-placed insurance.

John Nadel, an analyst at Stern Agee & Leach in New Yorksaid that Assurant's rate reduction of 30.5 percent compared withQBE's rate reduction of 35 percent is "reflective of the fact thatAssurant's rates were already modestly below that of QBE."

Nadel says he doubts that the difference is a "signal thatCalifornia will push Assurant to drop rates further, though I couldbe wrong."

He adds, "Assurant has rather consistently indicated that itbelieves its rates are, almost nationwide, below that of QBE. Theaction by California would, in my view, back that up."

Nadel had slashed Assurant's future earnings projections byone-third as a result of the October action by California, as wellas those proposed by other states.

However, he sees the push by Fannie as a greater concern to thecurrent players.