SB 410 Aims to Protect Consumers from Losing Their Homes

In the aftermath of the 2008 housing crisis, many homeowners in Florida and across the nation found themselves facing a new threat – predatory practices in the insurance industry. The use of force-placed insurance, also known as collateral protection insurance or lender-placed insurance, became widespread as a result of the mortgage crisis. Unfortunately, many borrowers found themselves paying exorbitant prices for insurance they didn’t even need, resulting in them losing their homes.

But today, we celebrate a victory for Floridians as the Florida Senate takes a stand against these predatory practices with the introduction of Senate Bill 410. This legislation, filed by Senator Ileana Garcia, codifies the National Association of Insurance Commissioners (NAIC) Lender-Placed Insurance (LPI) Model Act, which protects consumers while allowing the industry to remain viable and serve a crucial role in the insurance market.

It is a well-known fact that force-placed insurance is often more expensive and provides less coverage than standard homeowner’s insurance. This is due to the fact that it is placed on properties that are often vacant or located in high-risk areas and have poor loss histories. The policies are dual interest, protecting both the borrower and the lender, but many borrowers are unaware that they are even paying for this insurance.

In the past, the insurance industry has been able to get away with these predatory practices due to a lack of regulation. But Senate Bill 410 puts an end to that. The legislation requires the entire force-placed insurance industry to comply with the existing measures put in place by Florida and other states, including the prohibition of compensation and commissions, and the mandatory refiling of rates.

Rates for force-placed insurance are subject to the review and approval of the Florida Office of Insurance Regulation (OIR), which ensures that they are reasonable and fair. Under Senate Bill 410, force-placed insurance carriers must refile their rates at least once every four years and more often if they experience an annual loss ratio of less than 35% in any program for two consecutive years. This provides continuous oversight of these rates, protecting consumers from being taken advantage of by the insurance industry.

It’s important to remember that force-placed insurance only affects a small portion of the insurance market and is typically only placed on properties that are in default. Despite this, it has had a major impact on borrowers, many of whom have lost their homes as a result of the high costs associated with this type of insurance.

Senator Ileana Garcia and the Florida Senate should be commended for their efforts in protecting Floridian homeowners from these predatory practices. Senate Bill 410 ensures that the insurance industry will no longer be able to take advantage of vulnerable borrowers and puts an end to the exploitation that has been occurring for far too long.

This is a victory for all Floridians and a step towards a more just and equitable society. Let us work together to protect the rights and interests of all citizens, and make sure that no one falls victim to the predatory practices of the insurance industry.

Read the Bill

Florida Senator Ileana Garcia filed S.B. 410, “Collateral Protection Insurance” which specifies requirements for collateral protection insurance policy terms; provides for the calculation of collateral protection insurance coverages and premiums; specifies prohibited practices by insurers and insurance agents relating to collateral protection insurance; and specifies requirements for the filing of policy forms and rates, and more.