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CA Department of Insurance
CA Department of Insurance
CA Department of Insurance

Insurance Commissioner Jones Announces Governor Brown Signs Bill Protecting Seniors From Reverse Mortgage Scams

News: 2011 Press Release

For Release: September 7, 2011
Media Calls Only: 916-492-3566
Email Inquiries: cdipress@insurance.ca.gov

Insurance Commissioner Jones Announces Governor Brown Signs Bill Protecting Seniors From Reverse Mortgage Scams
Helps Stop Predatory Practices of Insurance Agents and Brokers

Insurance Commissioner Dave Jones today announced that Governor Jerry Brown signed Department-sponsored legislation into law that would protect seniors from being persuaded to use the proceeds of a reverse mortgage to buy unsuitable insurance products.

Assembly Bill 793, authored by Assembly Banking and Finance Committee Chair Mike Eng (D-Monterey Park), prohibits unscrupulous insurance agents and brokers from participating with, employing, or making referrals to an individual involved in the sale of reverse mortgages with the sole purpose of cross-selling inappropriate and unsuitable non-casualty insurance products such as an annuity. It also prohibits, with exceptions, individuals transacting insurance from being compensated, earning a commission, or given a direct incentive for providing reverse mortgage borrowers with a non-casualty insurance product that is connected to or a result of the reverse mortgage.

"There is an increasing need for this bill as the growth of the reverse mortgage business has been accompanied by aggressive marketing and abuse, especially when reverse mortgages are marketed along with insurance products or financial investment vehicles," said Commissioner Jones. "A reverse mortgage should be an option of last resort only for seniors with an immediate need for cash and have no other means."

AB 793 is designed to stop the predatory practices of insurance agents and brokers who act improperly based on knowing that a senior has recently acquired a reverse mortgage to, in turn, inappropriately solicit those same funds from the senior for a non-casualty insurance product.

"This new law will help return the concept of a reverse mortgage to its original form and protect seniors from being sold products they simply don't need - and, in fact, actually harm them financially," said Commissioner Jones.



Led by Insurance Commissioner Ricardo Lara, the California Department of Insurance is the consumer protection agency for the nation's largest insurance marketplace and safeguards all of the state’s consumers by fairly regulating the insurance industry. Under the Commissioner’s direction, the Department uses its authority to protect Californians from insurance rates that are excessive, inadequate, or unfairly discriminatory, oversee insurer solvency to pay claims, set standards for agents and broker licensing, perform market conduct reviews of insurance companies, resolve consumer complaints, and investigate and prosecute insurance fraud. Consumers are urged to call 1-800-927-4357 with any questions or contact us at www.insurance.ca.gov via webform or online chat. Non-media inquiries should be directed to the Consumer Hotline at 800-927-4357. Teletypewriter (TTY), please dial 800-482-4833.

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