QBE In $10M Settlement With New York State

Posted by Orb Staff on April 19, 2013 No Comments
Categories : Mortgage Servicing

13685_andrew_cuomo QBE In $10M Settlement With New York State The New York State Department of Financial Services has announced a $10 million settlement with insurance company QBE following charges of the improper use of force-placed insurance.

‘From 2009 to 2011, respectively, QBE Insurance's actual loss ratios for force-placed hazard insurance in New York were 18.2 percent, 18.5 percent and 13.5 percent,’ said the department in a press statement. ‘These loss ratios are substantially below the 55 percent expected loss ratio QBE filed with the department. In addition, QBE Insurance has paid contingent profit commissions to its affiliated program manager, QBE FIRST, when loss ratios were kept below a certain figure, which has ranged from 35 percent to 40 percent – both significantly below the expected loss ratios QBE Insurance filed with the department. This creates a troubling incentive for QBE FIRST to keep loss ratios as low as possible.’

As part of the settlement, QBE has agreed to file a premium rate with the department a permissible loss ratio of 62%. Futhermore, QBE will be required to re-file its rates with department every three years. The insurer must also provide annual reports on its actual loss ratio, earned premiums, itemized expenses, losses, and reserves.

New York Gov. Andrew Cuomo took credit for the settlement.

‘The kickbacks and payoffs in the force-placed insurance industry used to be a dirty little secret that pushed far too many families off the foreclosure cliff, but my administration's investigation is helping put a stop to those abuses,’ says Cuomo. ‘The nation-leading reforms that we're putting in place will mean lower home insurance costs and better protections for many working New Yorkers.’

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