New York's financial regulator Thursday said it reached a deal with additional insurers as it nears an end to its campaign to overhaul the market for a type of home insurance that is sold when borrowers drop their original coverage.The New York Department of Financial Services said it had reached agreements with four insurers that sell limited amounts of the so-called force-placed insurance. They agreed to adopt reforms that previously were accepted by the two biggest sellers of the insurance.
In addition, a U.S. subsidiary of insurer Munich Re called American Modern Insurance, agreed to pay a $1 million penalty to the state and offer restitution to some homeowners.
The three other sellers of the coverage--Chubb Corp., Fidelity & Deposit Co. of Maryland and FinSecure--"agreed to sign proactive codes of conduct implementing New York's reforms," state regulators said.
The overhaul efforts by the superintendent of the Department of Financial Services, Benjamin Lawsky, were aimed at lowering the cost of home insurance sold when borrowers drop their original coverage. The reforms include prohibitions against paying commissions to insurance agencies and brokers that are affiliates of mortgage servicers.
The latest effort follows individual settlements between DFS and the two biggest force-placed insurers, Assurant Inc. and QBE Insurance Group Ltd. Assurant agreed to pay a $14 million penalty and cut rates in March, while QBE agreed to pay $10 million and file for reduced rates in April.
Last year, Mr. Lawsky grilled Assurant, QBE and various banks about their relationships with each other. The state maintained those relationships have been highly profitable for the companies at the expense of consumers.