Benjamin M. Lawsky, Superintendent of Financial Services said, “Our investigation uncovered a kickback culture in this industry that inflated premiums and did serious damage to struggling homeowners. These new rules will help ensure that homeowners remain protected and force-placed insurers don’t simply slide back to the bad old practices of the past.”
Among other conditions, the new rules will prohibit force-placed insurers from issuing a policy on mortgaged property serviced by a bank or servicer affiliated with the insurers.
They cannot pay commission to those entities nor reinsure policies affiliated with those entities.
And the rule would bar force-placed insurers from paying contingent commissions based on underwriting profitability or loss ratios.