The Delaware Department of Insurance, along with insurance regulators for 48 other jurisdictions, have reached a multimillion dollar settlement with Assurant Inc., regarding the company’s writing of force-placed property insurance, of which Assurant is the nation’s largest writer.
Force-placed property insurance is a type of insurance that allows a financial lender the opportunity to insure its financial interest in a property. Under this insurance, a lender will take out a force-placed insurance policy on a property due to the fact that the property owner’s insurance has either expired or has been determined to be unsatisfactory in coverage.
The settlement, which became effective March 20, is the result of a multistate targeted market conduct examination called in 2015 and led by regulators from Delaware, Florida, Indiana, Massachusetts, Missouri, Pennsylvania and Rhode Island. The examination responded to concerns that the rates charged to consumers in the force-placed property insurance market were excessive and that the resulting “surplus” premium, paid by consumers, was transferred to mortgage servicers, who control the purchasing decision by means of rebates.
Under the settlement, Assurant confirmed changes in business practices designed to prevent the payment of rebates in connection with the issuance of force-placed property insurance and to curb reverse competition in the market. Assurant also agreed to regularly re-file its rates for force-placed property insurance and make annual reports to the subscribing jurisdictions that will assist in ongoing market surveillance. In addition, Assurant will be making a $75 million payment that will be allocated proportionally among the subscribing jurisdictions. Delaware’s proportional share is $212,505.