NEW YORK, April 18 (Reuters) - New York state regulators said they have reached a settlement with QBE Insurance Group over “forced-placed” insurance, with the insurer agreeing to pay a $10 million penalty, make restitution to harmed homeowners, and reform business practices.
Forced-place policies are typically taken out by banks or other lenders on homes where the owner does not have sufficient or any coverage. Regulators in the past have accused insurers of overcharging for the policies.
QBE’s settlement with the Department of Financial Services comes a month after Assurant Inc, the country’s largest forced-place insurer, agreed to pay $14 million over an industry-wide probe launched in October 2011 by DFS.
Regulators found that QBE, the nation’s second-largest force-placed insurer, created incentives for banks to buy its costly insurance, and in turn, pushed the higher costs onto borrowers, according to Benjamin Lawsky, superintendent of DFS.
Lawsky also said QBE paid commissions to affiliated brokers and insurance agencies to win this business, even though little work had by done to earn such payments.
QBE acquired the forced-placed insurance of Bank of America Corp subsidiary Balboa Insurance Company’s in 2011. Bank of America also signed onto the settlement, the state said.
A QBE spokesman had no immediate comment. A spokesman for Bank of America said it was “pleased to put this matter behind it and move forward.”