The Florida Office of Insurance Regulation is continuing to crack down on force-placed insurers. Earlier this month, the OIR entered a consent order against American Security Insurance Co. that will result in lower premiums for policyholders; the order should also result in less predatory practices by the insurer, the largest force-placed homeowners insurance company in the state.
We have discussed force-placed insurance often in this blog. Mortgage lenders require their borrowers to have homeowners insurance in place at all times. If the borrower’s policy lapses, the lender purchases a policy on the borrower’s behalf, passing the charges on to borrower.
Regulators have called out insurers for charging uncompetitive rates for the coverage. They have also tried to rein in lenders that have close financial ties to the insurers they do business with.
American Security will have to lower its rates by 10 percent under the OIR’s order. It will also have to revise its business practices. The insurer will no longer be allowed to pay commissions to mortgage servicing companies for placing policies with American Security. The order also requires the company to notify all of its current borrowers (by mail) of other available insurance.
Florida is getting a name for itself in the force-placed insurance controversy. In September, a federal court in Miami ordered JPMorgan Chase & Co. to pay $300 million to settle a class action suit about overcharging for force-placed insurance. Earlier in the year, the OIR ordered another large force-placed insurer, QBE, to institute an 18.8 percent premium reduction
American Security currently has more than 142,000 policyholders in Florida and writes more than $500 million in premiums. The order will result in a $51 million saving to consumers.
Source: South Florida Business Journal, “Florida regulator makes largest forced-placed insurer lower rates,” Brian Bandell, Oct. 9, 2013Share