Wells Fargo and QBE have agreed to settle a lawsuit dealing withforce-placed insurance policies in Florida involving 24,000borrowers.

The companies will pay $19.3 million to compensate theborrowers.

The settlement in federal district court in Miami dealswith claims that the bank and QBE overcharged homeowners in Floridafor force-placed insurance. The class-action lawsuit is one ofthree filed in connection with alleged overcharging of homeownersfor force-placed insurance, which became a huge business in thewake of the housing bust.

The two others were filed in New York, according to industryofficials. Best estimates are that the business has $2.6 billion inannual written premiums.

In other action, the regulator of Fannie and Freddie hasproposed a rule that would bar force-placed insurance underwritersfrom paying fees and commissions to banks who own or service homemortgages that are either delinquent or in foreclosure.

California and New York insurance regulators are also acting tobring down rates in those states, and New York has settled withAssurant and QBE recently on that issue.

Also, the Florida Insurance Department will hold a hearingMonday to discuss American Security Company’s proposal to keepaverage rates statewide at the same level now levied.

The proposed rate would become effective August 1, 2013 for anynew and renewal business. The proposed rate change is not uniformand some areas of the state are subject to higher rates.

American Security is an admitted Florida insurer and has thelargest market share of lender-placed policies with more than142,000 representing a total premium of $508 million in the state,according to Kevin McCarty, state insurance commissioner.

In the lawsuit settlement, filed Monday, Wells Fargo and QBEagreed to repay borrowers who paid the premium 25 percent in cash.Those who were charged the premium but didn’t pay will get a creditof 25 percent off their bill. In addition, the defendants agreed topay up to $5.48 million of the plaintiffs' attorney’s fees andcosts.

The class-action lawsuit was filed in 2011 and certified in Feb.2012.

The suit alleged that “Wells Fargo and QBE inflated theseinsurance premiums and profited from kickbacks and commissions fromthe force-placed insurance scheme.”

The lawsuit charged that Wells Fargo and QBE, the second-largestprovider of force-placed insurance, had an exclusive agreement inwhich QBE searched the bank’s records for homeowners with lapsedpolicies.

After the lawsuit was filed, Wells Fargo said it would no longerpurchase force-placed insurance from QBE in Florida.

In filing the lawsuit, Lance A. Harke of Harke Clasby &Bushman LLP, Miami, alleged that, “This scheme to inflate andprofit from force-placed insurance is a clear violation of Floridalaw and affects our State’s most vulnerable and disadvantagedhomeowners.”