Feb. 12--Florida regulators said today they approved an 18.8 percent decrease in rates for Praetorian Insurance Co., one of the major insurers that cut deals with lenders to provide expensive homeowners insurance to replace customer policies that lapsed.
The move affects 126,336 policies representing a premium volume of $521 million and represents savings to consumers of $98 million, the state's Office of Insurance Regulation said.
The "force-placed" policies can cost up to 10 times what regular policies do, and have triggered a consumer backlash, lawsuits and a push for new federal guidelines.
The Consumer Federation of America had called for a 44 percent cut for Praetorian in Florida rate hearings, saying the insurer took in excessive profits and paid what the consumer group called kickbacks to banks and other mortgage servicers.
"I'm encouraged this is a step in the right direction but discouraged it didn't go further, " CFA insurance director J. Robert Hunter said.
Praetorian, affiliated with QBE Specialty Insurance Co. and Balboa Insurance Co., initially sought a 2 percent decrease and later submitted a revised filing. Attempts to reach a company spokesperson were not successful.
Mortgage servicer Wells Fargo pushed at least 20,000 Florida customers into buying property insurance at inflated prices, according to a lawsuit that a South Florida judge certified for class action last year.
Wells Fargo and QBE Speciality Insurance Co. contrived an agreement to charge up to 10 times the market price for such policies and split commissions of 40 percent, the suit alleged.
"We disagree with a number of representations" by plaintiffs attorneys, Wells Fargo spokeswoman Vickee Adams said at the time. The company had no intention of harming customers, she said.
Wells Fargo Home Mortgage no longer works with QBE for any of its insurance services, Adams said Monday.
Miami-Dade, Broward and Palm Beach were among the counties where customers were heavily affected, said plaintiff attorney Howard Bushman of Miami.
Praetorian agreed to submit another rate filing Feb. 1, 2014 with additional information.
By March 1, state regulators said they expect a rate filing from American Security, Florida's largest force-placed or "lender-placed" insurer.
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