An Amelia, Ohio-based insurance company is exiting one of its coverage lines and may take hundreds of jobs with it.
According to a report from
Cincinnati.com, American Modern Insurance Group plans to leave the creditor-placed insurance business. About 325 of the company’s 1,400 employees support this coverage line, which offers policy a bank or mortgage servicer takes out on behalf of homeowners when property insurance is deemed insufficient or to have lapsed.
Officials at the company, who made this announcement Monday, say it’s not immediately clear how many people will be affected by the changes.
“The company will wind down this business over the next 15 to 24 months, during which time a certain amount of attrition and internal redeployment will occur,” American Modern said.
The carrier’s exit comes at a time when state regulators have placed heightened scrutiny on creditor-placed insurance. The main source of concern is the tendency for these policies to be priced higher than for borrower-purchased coverage, according to a 2015 US Government Accountability Office report.
“The lender-placed insurance business has been facing a challenging environment, which includes decreasing premium volume and ongoing rate pressure,” American Modern said in the same statement.
“The company made this decision as it has become clear this business model can no longer achieve acceptable returns in the foreseeable future.”
Tony Kuczinski, chairman of American Modern, said exiting creditor-placed insurance will underline the company’s commitment to personal lines – something that accounts for 80% of the carrier’s revenue.
The majority of those working in creditor-placed insurance are located in Amelia.
American Modern is a personal lines carrier that covers property such as residential real estate and recreational vehicles including motorcycles, watercraft, snowmobiles and collector vehicles.
The company’s revenues have grown from $23.6 million in 1965, when it was established, to $1.47 billion in 2014.
American Modern is a unit of
Munich Re.
