By: Matt Horn
Any homeowner in Florida with a mortgage is required to have insurance. If there is a lapse in coverage, the bank or mortgage company will then get lender-placed insurance for the homeowner.
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,” said Florida Office of Insurance Regulation, Kevin McCarty. “During the last several years there’s been a lot of interest in the state and federal level about business practices.”
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 Vice-President of Corporate Communications at Assurant, 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,” said Executive Director for Economic Justice, Birny Birnhaum. “When they get this really high force-placed insurance put on them and it really breaks their back.”
Opponents say the insurance companies are price gauging consumers, while the companies say they are doing what’s necessary to keep prosperities 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,” said Kahle.
The companies argue that the rate changes may save some people money; however, 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.