National Association of Insurance Commissioners (NAIC) to Hold August 9, 2012 Public Hearing on Lender-Placed Insurance
Jun 28, 2012
The National Association of Insurance Commissioners (“NAIC”) has scheduled a public hearing on Thursday, August 9, 2012 from 1:00 p.m. to 5:00 p.m. to further discuss the use of lender-placed insurance and the effect of the practice on consumers. The hearing, which will take place at the upcoming NAIC Summer National Meeting in Atlanta will be co-hosted by the Property and Casualty Insurance and the Market Regulation and Consumer Affairs Committees.
Lender-placed insurance is imposed by a bank or mortgage servicer on a home when a mortgage holder fails to maintain required insurance. Recent discussion has focused on the rates charged for lender-placed policies and the possible harm this type of insurance may do to consumers.
“This hearing will give regulators the chance to hear from consumers, the industry and financial institutions about the use of these types of homeowners policies,” said Mike Chaney, Chair of the Property and Casualty Insurance Committee and Mississippi Insurance Commissioner. “We recognize the importance of protecting lender collateral, but not at the expense of the consumer’s bank account.”
Regulators are expected to discuss the following issues during the hearing:
- The process for lender-placed property insurance and its impact on homeowners, including a review of the relationships between lenders/mortgage servicers and insurers;
- Whether coverage is being imposed on consumers retroactively;
- Disclosures used to inform consumers about lender-placed property insurance;
- Coverages provided by lender-placed insurance; and
- Premiums charged, loss ratios and related rating and pricing information.
“We want to know more about rates, consumer disclosures and how the relationships many of the insurers have with the lenders affects the transactions,” said Sharon P. Clark, Chair of the Market Regulation and Consumer Affairs Committee and Kentucky Insurance Commissioner.
An agenda has not yet been finalized.
To view NAIC Summer National Meeting information, click here. To view the public hearing notice, click here.
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