The largest “lender-placed” or “force-placed” insurance companies in Florida met with state officials about a rate change on the cost of coverage.
“It’s a very critical piece of insurance for Florida’s banks. During the last several years there’s been a lot of interest in the state and federal level about business practices,” said Kevin McCarty.
Florida is not the only state questioning the business, more than 140-thousand Floridians have paid for the coverage.
“This is a normal hearing process we go through,” said Shawn Kahle.
The companies work closely with mortgage lenders accused of charging up to four-times more for insurance for people who are having financial troubles…and have recently had a lapse in their homeowners insurance.
“As a result we see hundreds of thousands of consumers who are already struggling to pay the bill, when they get this really high force-placed insurance put on them and it really breaks their back,” said Birny Birnhaum.
While opponents say the “force-placed” insurance is a way to price gauge people having financial issues, the insurance companies say it’s a way to keep properties insured.
“When that happens, the lender-placed insurance is put into place until the owner can provide insurance for themselves and show proof they have insurance in place.”
The companies argue that the rate changes may save some people money… they were not able to provide numbers for the regulators.
The insurance regulators are not expected to have a decision until the end of May.