Office Announces Public Rate Hearing for Praetorian Insurance Company to Address Lender-Placed Insurance
The Florida Office of Insurance Regulation (Office) is conducting a public hearing to review the proposed rate filing for Praetorian Insurance Company’s (Praetorian) property collateral protection program, also known as “lender-placed” or "force-placed" insurance. This form of insurance is imposed by lenders on individuals who fail to secure homeowners’ insurance for their property as required by the mortgage or other lending document.
Praetorian is an admitted insurer in Florida and 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'.
The Office recognizes concerns raised regarding lender-placed insurance business practices, which are being examined at both the state and national levels. Florida has historically taken a proactive approach toward addressing this issue with consumer protection as the top priority. The Office 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 Office. These filings were carefully scrutinized and reviewed to ensure the rates in place were actuarially sound. In many states, rate filings have not been reviewed for more than a decade.
As President of the National Association of Insurance Commissioners (NAIC), Commissioner McCarty has announced that a hearing
will be held to address lender-placed insurance on August 9, 2012 in Atlanta, Georgia. Commissioner McCarty will be participating in this forum to hear testimony from insurers and to stay abreast of any developments on behalf of Florida’s citizens.