NY Clamps Down On Force Placed Insurance

September 20, 2013 at 7:40 am Leave a comment

cuomoGovernor Cuomo took the lead in announcing regulations yesterday intended to crack down on force-placed insurance practices.  The regulations are the culmination of a two-year investigation by the Department of Financial Services, which oversees both the insurance and banking industries in NY.  They seek to address what the state feels are excessive premiums and insurer-servicer relationships that pose conflicts of interest.  The regulations should not have much of a direct impact on credit unions, particularly since most of the notice requirements can be satisfied by complying with the notice requirements the CFPB has already put in place (12 CFR 1024.17(k)), but you should definitely be mindful of these new restrictions.

The regulations outline several prohibited practices that also apply to mandated flood insurance.  For example, insurers are prohibited from:

  • issuing force placed insurance on mortgage property serviced by a servicer affiliated with the insurer;
  • paying commissions to a servicer or a person or entity affiliated with a servicer; or
  • splitting premiums on force placed insurance with a servicer.

The regulations take effect 30 days after their publication in the State Register.

On that note, enjoy your weekend and let’s hope the Giants win one for the Gipper.

Entry filed under: Compliance, New York State, Regulatory. Tags: , , , .

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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