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Balboa Introduces Risk-Based Pricing For Lender-Placed Insurance Services

The Balboa Insurance Group, a subsidiary of Countrywide Financial Corp. here, has developed a new risk-based pricing program for lender-placed property hazard insurance.

Typically, such insurance is provided on a "one size fits all price" based on the state where the property is located, explained Craig Carson, president of Balboa Insurance Group. It is unique in this market, he said.

Servicers turn to lender-placed insurance when they are notified that the homeowner's hazard insurance policy has lapsed. The homeowner is notified of the need to obtain such coverage, but if they fail to do so by the time required, the lender obtains the coverage and bills the homeowner for it.

During the past five years, Balboa has been in development with Countrywide on this product. Recently it has taken it to three or four of its other clients, Mr. Carson said.

An example of the benefits the risk-based product provides, he said, is in Florida. Properties on the coast, which are more subject to storm damage, will be paying more for coverage than a property in the center of the state. Right now, all Florida properties are underwritten to a common premium.

About 60% of the borrowers that Balboa's lender-placed product serves will see a reduction in price, Mr. Carson said, with 15% at the same rate and 25% will have to pay more.

The risk-based pricing program will be available starting around April 1.

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