The Minnesota Department of Commerce has ordered New York based
Assurant to pay a penalty and provide refunds to policyholders over its force placed insurance practice in the state.
Force placed insurance is usually imposed by lenders on policyholders who allow their coverage to lapse. It is obscure but highly lucrative as it can cost up to 10 times as much as a usual policy.
Star Tribune said in an online report that the agreement with the state will require Assurant and its two subsidiaries, American Security Insurance and Standard Guaranty Insurance, to pay $5 million in fines.
The firm was also ordered to cut rates by 55% and provide refunds to as many as 45,000 homeowners across the state. The new, lower rates are expected to save residents $40 million to $50 million in coverage in the next 10 years.
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“The Commerce Department investigation found that Minnesota homeowners paid exorbitant hidden costs because of Assurant’s…insurance practices,” Insurance Commissioner Mike Rothman told the publication.
Assurant said in a statement to the publication that it had “cooperated fully” with the process.
Company spokesman Robert Byrd was noted as saying: “We believe it is in the best interest of our company and others in the industry to resolve this matter expeditiously and move forward.”
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