New York Weighs Insurer Profit Caps on Lapsed Borrowers

New York is considering capping profits for insurers that provide mandatory coverage for residential mortgage borrowers who lapse on their premium payments, the state’s financial regulator said.

Costs for such policies, known as force-placed insurance, “seem high and in many cases are exponentially higher than regular homeowners insurance,” Department of Financial Services Superintendent Benjamin Lawsky said in prepared remarks for a hearing today in Manhattan. “The percent of premiums actually spent to cover claims seem extraordinarily low.”