This article continues an article begun on Insurance Claims and Issues Blog on Monday, December 5, 2016, accessible here and at http://insuranceclaimsissues.typepad.com/insurance_claims_and_issu/2016/12/kickbacks-allowed-in-insurance-rates.html.
In lender force-placed insurance cases, force-placed insurance premiums are paid by lenders, but the lenders do not complain that the premiums are too high in contrast to the situation of consumers who claim in utilities rates lawsuits that a utility's rates are too high. Lenders hide the added expense of LFPI premiums in the borrower's monthly loan payment, but the borrower does not pay the force-placed insurance premiums as such. When these issues are presented by defendants' motions to dismiss, such issues are usually resolved in federal district courts where most of these cases and the vast majority of these motions to dismiss are filed.
Further, insurance companies which provide lenders with force-placed insurance policies regularly "redact" or "seal" whole swaths of their rate filings. See, e.g., the Florida Office of Insurance Regulation administrative docket for the rate filing titled, In the Matter of: American Security Insurance Company, Case No. 141841-13, Rate File Log #13-04125. As if to drive this point home, the carrier in that case successfully contended in a different context, without opposition, that the terms of its contracts including with mortgage lenders are trade secrets and should not be revealed. See ASIC v. State, Office of Ins. Reg., No. 2013-CA-001701, 2015 WL 10384359, at *4 (Fla. Cir. Ct., 2d Cir., Leon County, Aug. 13, 2015).
Another significant problem with transferring the filed rate doctrine from utilities regulation to use in defense of insurance cases generally, applies also to LFPI cases in particular. There is no known reporting system of administrative agency decisions concerning filed insurance rates.
In Florida, however, the Insurance Commissioner has consistently rejected kickbacks in filed insurance rates -- and just as consistently has required force-placed insurance carriers to agree not to include kickbacks if they want approval of their insurance rates in Florida. E.g., In re: American Modern Insurance Group, Inc., No. 174210-15-CO, Consent Order (Fla. O.I.R. Sept. 16, 2015), accessible online with its Exhibit "A," July 6, 2015 Florida Office of Insurance Regulation "Target Conduct Final Examination Rep't of American Modern Home Ins. Co.," et al., at http://www.floir.com/siteDocuments/American_Modern_Insurance_Group_Inc%20_Consent_Order_174210-15-CO.pdf (last accessed on Monday, December 5, 2016); In re: American Security Insurance Company, No. 14-141841-13, Consent Order (Florida O.I.R. October 7, 2013), accessible online at http://www.floir.com/siteDocuments/AmericanSecurity141841-13-CO.pdf (last accessed on Monday, December 5, 2016); In re: Praetorian Insurance Company, No. 141851-13-CO, Consent Order (Fla. OIR April 12, 2014), at http://www.floir.com/siteDocuments/Praetorian141851-13-CO.pdf (last accessed on Monday, December 5, 2016).
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To be continued on Insurance Claims and Issues Blog. NEXT: FLORIDA REJECTS THE FILED RATE DOCTRINE IN INSURANCE.
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