* Several banks targeted over forced-placed insurance
* JPM first bank to reach national settlement
* JPM ends commissions, reinsurance deal with Assurant
By Dena Aubin
NEW YORK, Sept 9 JPMorgan Chase & Co and
a major insurer have agreed to a $300 million settlement to
resolve accusations that they forced homeowners into over-priced
property insurance and entered into kickback arrangements that
inflated the policies' prices.
The lawsuit being settled - one of several targeting large
U.S. banks over force-placed insurance - said that the improper
practices unjustly enriched JPMorgan and insurer Assurant Inc by
more than $1 billion since 2008.
JPMorgan and Assurant did not admit any wrongdoing as part
of the settlement, which was in documents filed late on Friday
in a Miami federal court.
"The settlement will have no expected impact on our
financials," JPMorgan spokeswoman Amy Bonitatibus said in a
statement. She said the bank earlier this year discontinued a
reinsurance agreement with Assurant.
The settlement calls for JPMorgan to stop accepting
commissions for force-placed insurance.
The JPMorgan settlement is the first nationally to result
from several cases against banks pending in Miami federal court
that involve force-placed insurance.
REGULATORS TARGET PRACTICE
Banks have been under increasing scrutiny from regulators
over force-placed insurance, which is placed by a bank or other
mortgage lender to protect their interests in a property if the
homeowner's insurance lapses.
Mortgage agreements give lenders the right to force-place
insurance, but regulators have accused banks and insurance
companies of pushing up policy prices with improper commission
and reinsurance agreements.
In a statement, a spokesman for Assurant said the company
places insurance in accordance with the terms of the mortgage
and applicable regulations.
"The settlement is subject to court approval and we are
unable to offer further comment while the matter is pending,"
The nation's largest force-placed insurer, Assurant placed
about 1.3 million policies for JPMorgan Chase, collecting more
than $2.4 billion in force-placed premiums since 2008, according
to court documents filed by plaintiffs.
Assurant in March agreed to pay $14 million to settle a
probe by the New York state insurance regulator over its
business arrangements with banks and mortgage servicers.
Assurant neither admitted nor denied wrongdoing when it settled
SEVERAL LAWSUITS PENDING
The New York Department of Financial Services had accused
Assurant of paying commissions to banks and other mortgage
servicers that created an incentive for the banks to force-place
Typically, Assurant entered into agreements that let
reinsurance companies owned by banks take as much as 75 percent
of the profit for sharing risks.
In a statement announcing that settlement, New York Governor
Andrew Cuomo said JPMorgan made about $600 million since 2006 by
taking 75 percent of the profits from the force-placed business
it gave Assurant.
National lawsuits over force-placed insurance are still
pending in Miami against Citigroup, Wells Fargo,
Bank of America and HSBC Bank (USA), part of
A state-wide Florida lawsuit against Wells Fargo and QBE
Insurance Corp was settled in May for about $19
The JP Morgan case is Salvatore Saccoccio v JP Morgan Chase
Bank N.A. et al, No. 13-cv-21107, U.S. District Court, Southern
District of Florida.