In October, a federal judge in Florida granted final approval to a lawsuit on behalf of more than 250,000 homeowners against HSBC Bank and three insurance companies alleging illegal activities linked to the use of force-placed insurance. The settlement is worth around $32 million. The lawsuit was first filed in November 2012 and the settlement was granted preliminary approval earlier this year. Class members will receive cash refunds of 13 percent of the net annual premium.
The insurance companies named in the lawsuit include Assurant Inc., American Security Insurance Co., and Standard Guaranty Insurance Co. The lawsuit is case number 1:13-cv-21104 in the US District Court for the Southern District of Florida.
Meanwhile, a lawsuit filed against Wells Fargo Bank and Assurant Inc. has also received final court approval. That lawsuit involved around 1.3 million Wells Fargo clients who alleged Wells Fargo charged inflated premiums on force-placed insurance policies because of kickbacks that were passed along to Assurant and then given back to Wells Fargo as commissions.
That lawsuit is Fladell et al v. Wells Fargo Bank NA et al, case number 0:13-cv-60721 in the US District Court for the Southern District of Florida.
While some companies are settling force-placed insurance lawsuits, others are dropping force-placed insurance entirely. The Wall Street Journal (11/12/14) reports that Altisource Portfolio Solutions will stop offering force-placed insurance due to “uncertainties with industrywide litigation and the regulatory environment.”
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These concerns have led to lawsuits filed by states, including New York, against companies involved in force-placed insurance, and class-action lawsuits filed by homeowners who often allege that they either paid too much because of kickbacks or that the force-placed insurance policy was unnecessary because they had adequate coverage.