Green Tree Consumer Discount Company, specializing in sub-prime consumer mortgage and manufactured home loans, has refused to accept policies of insurance from certain small insurance companies as part of their loan eligibility criteria, simply because these companies carry a Financial Stability Rating from Demotech, Inc. rather than choosing to be rated by the more well-know A. M. Best Company.
Demotech, Inc. is an extremely credible source for this type of hazard insurer rating. A Demotech Financial Stability Rating of A or better is accepted by Fannie Mae, Freddie Mac, and HUD.
A Financial Stability Rating of A or better indicates Demotech's favorable opinion of the insurance comany's ability to meet its financial obligations.
Even when information on the insurance company's rating and Demotech's authority has been provided to Green Tree it has been refused.
Due in part to the expense of obtaining an A. M. Best rating, many regional insurance carriers utilize Demotech's services. These regional carriers may be more likely (than large national carriers rated by A. M. Best) to have the flexibility in underwriting necessary to insure risks in the category financed by Green Tree.
Many small insurance carriers maintain a very conservative reinsurance program to further protect the financial viability of their company and to meet the financial obligations to customers. Even when proof of that program has been provided to Green Tree it has been refused.
Upon refusal to accept the consumer's preference in obtaining insurance with a regional insurer, property insurance coverage may be force placed through Green Tree's subsidiary insurance agency, at a much higher cost to the consumer. (Remember, these are already financially-disadvantaged families, who least can afford the added expense.)
Although the affected insurance companies stand to lose a small percentage of business due to Green Tree's current business practices, the issue is not a corporate one it is a consumer issue. Thousands of Americans are being coerced by Green Tree.