Now that NY DFS has settled with these four companies, the following restrictions on LPI (called "Forced-Placed Insurance" in the NY DFS' press release) are in effect in New York:
- "Force-placed insurers shall not issue force-placed insurance on mortgaged property serviced by a bank or servicer affiliated with the insurers.
- Force-placed insurers shall not pay commissions to a bank or servicer or a person or entity affiliated with a bank or servicer on force-placed insurance policies obtained by the servicer.
- Force-placed insurers shall not reinsure force-placed insurance policies with a person or entity affiliated with the banks or servicer that obtained the policies.
- Force-placed insurers shall not pay contingent commissions based on underwriting profitability or loss ratios.
- Force-placed insurers shall not provide free or below-cost, outsourced services to banks, servicers or their affiliates.
- Force-placed insurers shall not make any payments, including but not limited to the payment of expenses, to servicers, lenders, or their affiliates in connection with securing business."
In addition, NY DFS Superintendent Lawsky urged other state regulators to take similar actions. "These reforms will now cover all of the New York market, but more can and should be done. Unless other regulators across the country move swiftly to crack down on the kickbacks and payoffs we found in the force-placed insurance industry, millions of Americans will remain at risk. We’re continuing to urge other regulators to implement the reforms New York helped pioneer so that every single homeowner is protected."
This call to action was first stated in Lawsky's April 2013 letter to other State Insurance Commissioners.