Office Orders Praetorian Insurance Company to Modify its Business Practices for Lender-Placed Insurance in Florida
Targeted News Service |
Similar reform measures are already being implemented by
Lender-placed (also known as force-placed) insurance is a commercial policy purchased by a bank, lender or mortgage servicer that covers the lender and sometimes the borrower when a borrower does not maintain the property hazard insurance required by the terms of the mortgage or other lending document. Often, this type of insurance is much more expensive than the borrower had been paying and the cost is passed back to the borrower.
In addition to agreeing to submit annual rate filings for its LPI program until further notice of the Office, Praetorian also agrees to implement a number of business reforms within six months to include:
* Notifying all current borrowers by mail and within 120 days of the execution of the Consent Order to inform them about alternative options available for LPI coverage;
* Prohibiting the payment of commissions to a mortgage servicer on LPI policies obtained by that servicer;
* Prohibiting the payment of contingent commissions based on underwriting profitability or loss ratios to any servicer or entity affiliated with a servicer;
* Prohibiting the issuance of LPI policies on mortgaged property serviced by an affiliate;
* Prohibiting the issuance of reinsurance on LPI policies with a captive insurer of any mortgage servicer;
* Prohibiting the provision of free or below-cost outsourced services to a mortgage servicer; and,
* Prohibiting the payment of any incentive to a mortgage servicer as an inducement to secure LPI business.
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