Former exec tells CMHC: time to drop premiums

Former exec tells CMHC: time to drop premiums | Insurance Business America - Page 2

Former exec tells CMHC:  time to drop premiums

“They have room to do it,” Bell told the Financial Post. “Insurance is all about risk and losses. If you’ve changed your risk and underwriting criteria and made it tighter, you’ll have lower loan losses.”

Any consumer with a downpayment of less than 20 per cent and borrowing from a financial institution regulated by the Bank Act is required by law to get mortgage default insurance. CMHC controls about three quarters of the market with Genworth Financial and Canada Guaranty splitting the rest.

Bell points out the Crown corporation has averaged $1.1-billion annually in net income over the last five years. He estimates a 15 per cent reduction in fees would have amounted to $194-million for this year.

“I work with first-time home buyers every day and that’s the group that has been hurt,” Bell told reporters. “I’m putting my name and reputation on the line after being in the industry for so long. I’m not going to be getting any friendly emails (mortgage insurers).”
 


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