The New York State Department of Financial Services has proposed new regulations further extending the settlements it made with several of issuers of force-placed insurance. It said these new regulations will help ensure that the terms of those settlements will apply to the industry moving ahead even if new insurers enter the market.
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.
DFS has reached settlements with
