Friday, July 13, 2007
Contact: Jessica Robinson, 573-751-0290
Blunt Signs Anti-Fraud Protections for Missouri Home Buyers
JEFFERSON CITY–Gov. Matt Blunt today signed legislation to help protect consumers from title insurance schemes and ensure that unscrupulous insurance agents who take advantage of trusting consumers are held accountable. The law fights fraud by both improving consumer protection for Missourians buying a home and closing insurance loopholes affecting insurance and annuities sales.
"No Missourian should have to fall victim to the potentially devastating impacts of insurance fraud," Gov. Blunt said. "This bill enacts important provisions to protect Missourians purchasing a new home or investing in their future and cracks down on loopholes to put a stop to unscrupulous insurance agents and ensure all agents protect their customers' best interest."
All Missouri homeowners with a mortgage are required to purchase title insurance when buying a home. Unfortunately in the last several years, a handful of title insurance agencies used customers' money inappropriately and ultimately were forced to close because of the abuse. Senate Bill 66, sponsored by Sen. Scott Rupp, offers important protections to help put an end to this fraud for Missouri consumers. The legislation ensures Missourians hard-earned money will not be used inappropriately by requiring mandatory audits of insurance agency's transactions.
In addition, the legislation mandates rules to hold agents accountable to protect customers' interests. In recent years, there have been incidents in which agents have taken advantage of customers by selling them products that are completely inappropriate for their needs. One example is selling annuity products to the elderly. Annuities are most commonly intended for long-term investment and do not generally have the flexibility to benefit some older customers. The legislation increases the civil penalties for agents who take advantage of customers from $100 to a fine of up to $20,000 per violation, with a maximum penalty of up to $1 million for multiple violations. If the fraud causes a financial loss to the consumer, penalties of up to $1 million per violation with no limit for multiple violations may be issued.
"People buy insurance to protect themselves in a time of need," Sen. Scott Rupp said. "This bill provides the consumer protections necessary to ensure the insurance will be there when they need it, and at the best possible price provided through licensed agents."
Gov. Blunt has been a strong supporter of these reforms. As secretary of state, he proposed using Missouri's securities laws to require advisors to professionally evaluate the suitability of an annuity for a consumer before recommending the purchase. Under his leadership last year, the department conducted investigations into 16 title insurance agencies in the St. Louis area. He also directed the Department of Insurance, Financial Institutions and Professional Registration to host public forums to discuss the problems surrounding both the annuity and title insurance industries in the state.