Florida Insurance Consumer Advocate to NAIC: Market Conduct Reviews Might Be Used to Make Lender-Placed Insurance More Efficient, Transparent

Aug 16, 2012


In her written comments submitted for the August 9, 2012 National Association of Insurance Consumers (“NAIC”) public hearing on private lender-placed insurance, Florida Insurance Consumer Advocate Robin Smith Westcott suggested that the tools available through market conduct reviews might be utilized to make lender-placed insurance more efficient and transparent, thereby protecting homeowners from being improperly placed into this type of coverage. 

Citing factors such as Florida’s unabated foreclosure crisis, private insurers ceasing to underwrite coastal properties and Citizens Property Insurance Corporation aggressively depopulating policies, Ms. Westcott asked the NAIC to address several specific issues, such as:

  • Lender-placed insurers typically filing rates that assume loss ratios much greater than historical losses
  • The phenomenon of “reverse competition,” which is created by insurers paying commissions to banks and offering servicing activities traditionally performed by the bank or its servicer
  • The “intricate contractual relationships” between insurers and banks that have yielded a degree of profit leading to “excessive rates and abuses”

To view Ms. Westcott’s comments, click here.

The NAIC’s four-hour August 9 hearing included the following speakers:

  • Birny Birnbaum from the Center for Economic Justice, who discussed consumer perspectives
  • Insurance Information Institute President and CEO Robert Hartwig, who was joined by Mr. Birnbaum to review association and economic perspectives
  • John Rollins of Rollins Analytics and Sheri Scott of Milliman, who discussed actuarial perspectives
  • John Frobose of Assurant, Joseph Markowicz of PRP Claims, James Novak of QBE First, and Michael Pickens and James Votta of Ernst and Young reviewed insurer perspectives
  • Mr. Birnbaum, Mr. Hartwig and Mr. Frobose, along with American Bankers Insurance Association Executive Director Kevin McKechnie, participated in discussion on the issue
  • Kentucky Insurance Commissioner Sharon Clark delivered concluding remarks

To view the August 9 agenda, meeting notice and written testimony submitted by presenters and other interested parties, click on the hyperlinks below:


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