NU Online News Service, May 17, 2:43 p.m.EDT

New York State regulators intend to expand their review ofinsurance coverages beyond force-placed insurance programs,according to Benjamin M. Lawsky, superintendent of FinancialServices.

He made the comment today at a hearing on force-placed insuranceprograms—insurance coverage that is imposed by lenders onindividuals that have failed to secure homeowners insurance fortheir properties.

Lawsky says the department will expand its review after the department completes the current hearings on homeownerscoverage.

At today's hearing, Robert Hunter, director of insurance for theConsumer Federation of America, urged the department to look beyondforce-placed insurance programs and examine "other lines ofinsurance where reverse competition is rampant, such as autoforce-placed insurance, credit insurance, debt cancellationproducts and title insurance. Those are all real abuses that needto have a deep look [at]."

Lawsky invited Hunter back to address these other insuranceproducts.

Hunter said during the hearing that force-placed homeownersinsurance "adds to the economic stress on borrowers" withhigh-premium rates that are not actuarially justified.

He said, generally, the losses the insurers suffered did notjustified rates that are sometimes three to four times whathomeowners pay for coverage through private carriers that theysecure on their own.

Hunter said the force-placed programs suffer from a combinationof cozy relationships between insurers and lenders, and a kickbackscheme that benefits banks using the insurance companies.

Hunter called on regulators to require these carriers to use astrictly-enforced minimum-loss. He says out of every dollarborrowers pay for insurance, 80 cents should be paid out of theinsurer to cover losses.

Failing that, regulators should demand rate filings and prohibitthe insurers from passing on kickbacks or other unjustifiedcharges.

"Consumers urgently need your help," said Hunter, adding that hehoped the state's findings would help educate the rest of thecountry.

In earlier testimony, Lawsky and other regulators heard fromfour homeowners who paid considerably more for the force-placedinsurance than what they later discovered they would pay in theadmitted market.

Many spoke about the economic stress they suffered when thecoverage was forced on them. In some cases, carriers either chargedcustomers retroactively for coverage or ignored evidence ofinsurance when it was presented to the carrier.

Often, they said, the force-placed insurance premiums increasedtheir mortgage payments significantly and put them close todelinquency.

It was not until they consulted with an attorney that theydiscovered they were unnecessarily being forced to purchaseinsurance they could secure for less elsewhere.

"If they were not lucky enough to find a lawyer, this would havebeen a disaster," Lawsky remarked at the close of the homeowners'testimony.