Cuomo: Insurer QBE to pay $10M in settlement
U.S. affiliates of the Australian company QBE Insurance Group agreed to pay restitution to some homeowners who were harmed when they received "force-placed insurance."
Homeowners with mortgages are generally required to purchase insurance to protect the bank's interest in the property. If the homeowner stops paying for the insurance -- usually as a result of financial distress -- the lender can force the property to be insured and bill the homeowner.
The Cuomo administration said QBE engaged in profit-sharing arrangements with banks, brokers and loan servicers that drove up costs. Premiums for the insurance were two to ten times greater than regular homeowners insurance even though it provided less coverage, the administration said.
"The kickbacks and payoffs in the force-placed insurance industry used to be a dirty little secret that pushed far too many families off the foreclosure cliff," Cuomo said.
The settlement follows a similar agreement reached with insurer Assurant last month. Both companies agreed to follow practices intended to lower premiums and eliminate conflicts of interest once the new practices are incorporated into regulations by the state Department of Financial Services. They also agreed to give refunds to certain homeowners such as those who defaulted or went into foreclosure because of the insurance.
The settlement applies to QBE, as well as the portfolio it acquired from Balboa Insurance Company.
"QBE is pleased to have resolved this matter," QBE North America chief executive David Duclos said. "We value our regulatory relations in the U.S."
QBE neither admitted nor denied wrongdoing under the settlement. The company directed specific questions about the settlement to its attorney who declined to comment.