Florida Office of Insurance Regulation Announces Public Rate Hearing for Praetorian Insurance Company to Address Lender-Placed Insurance

Jun 28, 2012


The Florida Office of Insurance Regulation (“OIR”) announced that it is conducting a public hearing on July 3, 2012 beginning at 9:00 a.m. to review a proposed statewide average rate change of -2.2 percent for Praetorian Insurance Company’s (“Praetorian”) property collateral protection program.  To view the agenda, click here.

Praetorian’s program–also known as “lender-placed” or “force-placed” insurance–is imposed by lenders on individuals who fail to secure homeowners’ insurance for their property as required by their mortgage or other lending document.

Praetorian’s proposed rate would become effective September 1, 2012 for any new and renewal business.  The requested rate change is not uniform and some areas are subject to higher rates. 

An admitted Florida insurer, Praetorian amended its certificate of authority to include the credit line of business (lender-placed coverage is reported under this line of business for annual statement purposes) in May 2012.

QBE Specialty Insurance Company, a surplus lines insurer, and its affiliated admitted company, Balboa Insurance Company, are merging each of their lender-placed insurance programs into Praetorian.  This is due in part to new requirements established by Fannie Mae excluding surplus lines insurers (non-admitted insurers) from issuing lender-placed coverage on its loans for homeowners.

In its announcement today, June 28, 2012, the OIR indicated that it recognizes concerns about lender-placed insurance business practices, which are being examined at both the state and national levels.  It emphasized that Florida has historically taken a proactive approach toward addressing this issue with consumer protection as the top priority.

The OIR also reminded that it regularly reviews rate filings for admitted insurers offering lender-placed insurance coverage.  In 2009, the two largest admitted insurers writing this coverage were ordered to submit rate filings to the OIR.  These filings were carefully scrutinized and reviewed to ensure the rates in place were actuarially sound.  In contrast, rate filings in many other states have not been reviewed for more than a decade.

As President of the National Association of Insurance Commissioners (“NAIC”), Florida Insurance Commissioner McCarty has announced that an NAIC public hearing will be held to address lender-placed insurance on August 9, 2012 in Atlanta, Georgia.  Commissioner McCarty will attend this event to hear testimony from insurers, as well as to stay abreast of any developments on behalf of Florida’s citizens.


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