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Monday, April 14, 2014

Flood Insurance Consent Orders in Florida

Florida's Office of Insurance Regulation (OIR) issued a Consent Order on Friday to Florida’s second largest lender-placed insurance (LPI) provider. These two orders now cover 90 percent of the flood insurance market in the state of Florida.

The requirements target the relationship between the lenders, the flood insurers, and reinsurance, and include the following:
  • Prohibiting the payment of commissions to a mortgage servicer on LPI policies obtained by that servicer
  • Prohibiting the payment of contingent commissions based on underwriting profitability or loss ratios to any servicer or entity affiliated with a servicer
  • Prohibiting the issuance of LPI policies on mortgaged property serviced by an affiliate
  • Prohibiting the issuance of reinsurance on LPI policies with a captive insurer of any mortgage servicer
  • Prohibiting the provision of free or below-cost outsourced services to a mortgage servicer
  • Prohibiting the payment of any incentive to a mortgage servicer as an inducement to secure LPI business
Read the FIO press release.
Read the most recent consent order.