The settlement, with an initial face value of $300 million, also includes injunctive relief valued at more than $650 million.
The defendants in the case are JPMorgan Chase NA and Assurant Inc. Plaintiffs in the class action accused the bank and the insurance provider of overcharging, amongst other allegations.
Forced-place insurance, otherwise known as lenders insurance, provides the mortgage holder on real property an opportunity to summarily place insurance if it is determined that existing insurance has lapsed or if a property is found to be under-insured. While few would dispute a mortgage holder’s right to do this, what has many property owners in a snit are the fees and costs associated with lender insurance policies that can be far more expensive than traditional insurance products, with ultimately less coverage.
Plaintiffs in Forced-Placed Insurance lawsuits accuse defendants of setting the high rates in order to fund kickbacks. The ruling, announced February 28, was concluded with help from a mediator and provides class members with the right to a 12.5 percent refund on their net annual premiums with regard to the lenders insurance products.
While there were some objections to the settlement, most hailed the settlement as fair, considering other cases that have concluded less favorably.
As part of the settlement, the defendants are required to refrain from continuing along the track of allegedly wrongful force-placed insurance practices. It is not known if JPMorgan Chase and Assurant are required to admit to wrongdoing in agreeing to the settlement.
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A spokesperson with JPMorgan Chase noted that activity around reinsurance and the acceptance of commissions has been dormant for some time.
The forced-placed insurance class-action case is Salvatore Saccoccio et al. v. JPMorgan Chase Bank NA et al., Case No. 1:13-cv-21107, in the US District Court for the Southern District of Florida.