Thursday, April 05, 2012

Force-placed insurance probe gains steam

New York's top financial regulator is expanding an investigation of insurers that force homeowners policies on borrowers after turning up evidence that consumers were charged too much, according to people familiar with the situation.

Benjamin M. Lawsky, superintendent of the New York Department of Financial Services, is issuing new subpoenas and formal document requests to several insurers, demanding justification for how their rates and loss ratios were calculated, these people said.

The loss ratio is the percentage of premiums collected by an insurer that is paid out to policyholders. Based on information gathered in initial inquiries since the probe was launched in October, Mr. Lawsky and investigators believe those payouts are as little as 20 cents on the dollar, compared with estimates to regulators of 55 cents.

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