At their recent meeting in Houston, members of the National Association of Insurance Commissioners (NAIC) voted to re-open the Creditor-placed Insurance Model Act. Currently, the model act does not apply to insurance placed in connection with either commercial loans or collateralized real property, such as lender-placed insurance (LPI). However, there likely will be a push, especially from consumer groups, to make the Act apply to collateralized real property. The Property and Casualty Insurance Committee will take the lead on reviewing the current model.
ABIA’s Kevin McKechnie testified on LPI before the NAIC last year. At that time, it appeared the NAIC would not take further action on LPI. But because of recent events related to LPI, including the New York Department of Financial Services’ Consent Order, the CFPB’s qualified mortgage final rules and the FHFA’s proposal to prohibit certain compensation paid to servicers by carriers there is pressure on the NAIC to revisit the issue; thus, the re-opening of the model act.