The Cuomo Administration announced that its force-placed insurance reforms will cover 100% of the New York market.
This came as a result of the New York State Department of Financial Services reaching an agreement with four force-placed insurers, including American Modern Insurance, Chubb, Fidelity and Deposit Company of Maryland and FinSecure.
Earlier this year, some other insurance providers, such as Assurant and QBE, also settled with the Cuomo Administration.
The force-placed insurance platform will help better protect homeowners from abuse, eliminate the kickbacks DFS uncovered and save taxpayers millions of dollars going forward through lower rates, the Cuomo Administration explained.
"These reforms will now cover all of the New York market, but more can and should be done," said Benjamin Lawsky, president of Financial Services.
He added, "Unless other regulators across the country move swiftly to crack down on the kickbacks and payoffs we found in the force-placed insurance industry, millions of Americans will remain at risk. We’re continuing to urge other regulators to implement the reforms New York helped pioneer so that every single homeowner is protected."
The settlement includes a $1 million penalty, restitution for homeowners who were harmed and a requirement that American Modern Insurance implement the force-placed insurance reforms.
Furthermore, American Modern will also be required to lower its premium rates going forward.
Additionally, Chubb, Fidelity and Deposit Company of Maryland and FinSecure agreed to sign proactive codes of conduct implementing New York’s reforms.
"I'd like to particularly commend Chubb, Fidelity & Deposit, and FinSecure for stepping up to the plate and moving swiftly to adopt these important reforms," Lawsky said.
New York’s reforms include various prohibitions including a provision that says force-placed insurers cannot issue insurance on mortgaged properties serviced by the bank or servicer and force-placed insurers will not pay contingent commissions based on underwriting profitability or loss ratios.
In the near term, DFS will issue regulations on force-placed insurance covering any company that decides to offer this type of coverage in New York.