BOSTON — Attorney General Maura Healey announced Monday that QBE Insurance (QBE) will pay more than $2.4 million in refunds to more than 2,100 Massachusetts homeowners who were improperly charged for property insurance.
The AG’s Office previously reached a settlement with QBE that required the company to undergo an audit regarding force-placed insurance policies. This audit, performed by the AG’s Office, established the total amount of refunds that will be returned.
“QBE charged Massachusetts homeowners for expensive and duplicative coverage that they did not need,” said AG Healey. “This agreement will provide refunds to thousands homeowners.”
Force-placed insurance is a type of property insurance taken out by a mortgage lender to protect a home when the homeowner does not have insurance in place. Premiums on this insurance are generally two to three times as expensive as regular homeowners insurance and these policies have limited coverage. Mortgage servicers often rely on force-placed insurance companies, like QBE, to monitor whether borrowers have maintained appropriate insurance coverage.
Some mortgage servicers accept commission payments from these force-placed insurers, which contribute to the high cost of force-placed insurance and create conflicts of interest for mortgage servicers.
Although force-placed insurance is only intended for circumstances in which the borrower has failed to adequately insure the mortgaged property, the Attorney General’s audit of QBE found more than 2,100 of cases of duplicative insurance coverage for Massachusetts homeowners. Borrowers eligible for settlement money were previously required by their mortgage servicer to purchase force-placed insurance from QBE or were overcharged for force-placed insurance because they were mistakenly sold commercial policies rather than less expensive residential policies. The average settlement payment for affected homeowners is approximately $1,100. QBE cooperated fully with the audit, which covered policies from 2008 through 2015.
The AG’s Office is a leader in securing restitution to those affected by forced-placed insurance. In November 2015, the AG’s Office reached a settlement with the American Security Insurance Company regarding duplicative coverage and force-placed insurance overcharges. After the subsequent audit, the AG’s Office provided more than $6.3 million in refunds to consumers. In February 2016, the AG’s Office entered into a $4 million settlement with HSBC to resolve allegations that HSBC had accepted kickbacks relating to force-placed insurance. In April 2017, AG Healey sued Ocwen relating to its alleged force-placed insurance abuses and other abusive mortgage servicing practices.
Consumers who have complaints or disputes relating to force-placed insurance or their mortgage are encouraged to file a complaint with the AG’s Office. Consumers who have questions about the settlement or force-placed insurance can call the Attorney General’s Insurance Hotline at 1-888-830-6277. Eligible consumers will receive refund checks in the mail in the coming weeks.
This case was handled by Tim Hoitink, Arwen Thoman, David Lim, Burt Feinberg, and Glenn Kaplan, all of AG Healey’s Insurance and Financial Services Division.