JPMorgan Chase NA and Assurant Inc.’s $300 million settlement of a class action claiming they profited handsomely from high rates on forced-placed insurance policies will energize plaintiffs to pursue similar blockbuster deals at a time attorneys say force-placed actions are ripe for resolution.
Chase has agreed to dole out millions to settle the suit in Florida federal court as financial giants like Bank of America NA, HSBC USA NA, Citibank NA and Wells Fargo NA are dogged by similar putative class actions. Plaintiffs claim they were overcharged for insurance policies that the banks forced on properties that were underinsured or not insured at all by homeowners. According to plaintiffs, the high cost of these policies stemmed from kickbacks that insurers paid lenders that provided their force-placed business.
Those kickbacks included commissions and low-cost or free administrative services, as well as questionable reinsurance arrangements with bank affiliates.Under the deal announced Friday, the first nationwide settlement among several high-profile cases in Florida, Chase will provide refunds of 12.5 percent of the annual premiums for force-placed policies and refrain from inflating premiums for six years. Harry Low, an arbitrator, retired judge and former California Insurance commissioner, said there’s a good chance that other banks and lenders would strike pricey deals with plaintiffs to resolve force-placed claims.“The precedent set by Chase Bank may encourage other lenders to follow by making significant payments to the similar class of borrowers,” Low said. Continue reading