California Insurance Commissioner Dave Jones has ordered the California Department of Insurance to launch an investigation into Wells Fargo and National General Insurance, after Wells Fargo acknowledged that it forced auto insurance on thousands of its car-loan customers.
On July 27, Wells Fargo admitted that it failed to properly manage its collateral insurance protection program and that the blunder resulted in thousands of delinquencies and wrongful vehicle repossessions. The bank said it has allocated $80 million to compensate victims – $64 million for “cash remediation” and $16 million for “account adjustments.”
“These most recent revelations by Wells Fargo are particularly troubling,” Jones said. “The department will investigate fully to determine the extent to which California consumers were affected by improper placement of force- or lender-placed auto insurance and seek corrective action and penalties in the event that California’s consumer protection laws were violated.”
Force-placed or lender-placed insurance refers to insurance that a lender requires a borrower to purchase by signing up the borrower for the insurance to cover the vehicle in case the borrower fails to get their own insurance or allows their auto insurance to lapse.
Following an earlier order from Jones, the California Department of Insurance has an investigation underway regarding allegations that Wells Fargo signed consumers up for life insurance without their consent.
Jones also directed the department to work with other state insurance regulators who might be opening investigations of Wells Fargo and National General Insurance.