Did a company place you on forced-placed insurance and collect the money you were suppose to use to repair your home? In the context of “forced-placed insurance,” Assurant has faced lawsuits and regulatory actions over allegations of misconduct, including conspiring with mortgage lenders to overcharge homeowners and accepting kickbacks. While forced-placed insurance is legal, the issue is that it is often provided through anticompetitive arrangements at inflated rates that benefit the lender and insurer at the borrower’s expense.
Assurant settles with New York over “force-placed” insurance
March 21 (Reuters) – Assurant Inc settled a New York probe of its “force-placed” insurance by agreeing to pay the state a $14 million penalty, refund some homeowner premiums and reform certain business practices.
The investigation found Assurant made improper financial arrangements with banks and mortgage servicers that pushed up the price of insurance, according to the New York State Department of Financial Services, which conducted the probe.
“Our investigation found that insurers and banks built a network of troubling relationships and payoffs that helped drive premiums sky high,” Lawsky said.
In some cases, the probe found, premiums were ten times higher than premiums for voluntary insurance.
The settlement follows an agreement a unit of Assurant reached last year with the California Department of Insurance to reduce the premium rates for its force-placed hazard insurance product by 30.5 percent.
The regulator noted that JPMorgan Chase has made about $600 million since 2006 by taking 75 percent of the profit from the force-placed business it gave Assurant. The money came through a reinsurance arrangement with Banc One Insurance Company, a JPMorgan Chase affiliate.
“We receive no commissions on lender placed insurance. We do have a risk-sharing relationship with the insurance provider. We continuously review our policies to ensure they are meeting our customers’ needs,” JPMorgan spokeswoman Amy Bonitatibus said.
In the United States, the force-placed homeowner’s market is dominated by Assurant and Australian insurer QBE.