(Source: By Julie Patel, Sun Sentinel, Fort Lauderdale, Fla. (MCT) – Florida regulators will question executives of Praetorian Insurance Co. and two insurers that want Praetorian to take over their force-placed insurance policies next week.
Controversy is brewing over force-placed policies – those imposed by lenders on homeowners whose insurance has lapsed or expired – because some homeowners say they weren’t warned that their policies expired or they already had coverage while they were being charged for force-placed policies.
Many force-placed policies are sold by surplus lines insurers, companies with unregulated rates, or by insurers with financial ties to lenders so prices are often much higher.
Praetorian wants a rate decrease of 2.2 percent but the “change is not uniform and some areas are subject to higher rates,” according to a statement from the Office of Insurance Regulation.
QBE Specialty Insurance Co., a surplus lines company, and its regulated affiliate, Balboa Insurance Co., are moving their force-placed policies into Praetorian partly because of new requirements by Fannie Mae for its loans that exclude the unregulated surplus lines insurers from selling force-placed coverage.
QBE’s rates are 10.5 percent higher than Balboa’s and Praetorian would use the lower rates, according to the rate proposal.
In its statement, the insurance regulation office said it regularly reviews rate filings for regulated insurers with force-placed coverage, unlike states where rate filings haven’t been reviewed for years. In 2009, the office scrutinized rates for the two largest insurers selling force-placed coverage.
Insurance Commissioner Kevin McCarty, who is president of the National Association of Insurance Commissioners, announced this week that the group will hold a hearing on Aug. 9 in Atlanta about force-placed coverage.
The Praetorian hearing is Tuesday at 9 a.m. and can be viewed live online at the Florida Channel’s website.
Photo: Tens of thousands of people have moved into the sprawling subdivisions in western Pembroke Pines since Hurricane Andrew. (Sun Sentinel)
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©2012 the Sun Sentinel (Fort Lauderdale, Fla.)
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