At today's hearing, Robert Hunter, director of insurance for the Consumer Federation of America, urged the department to look beyond force-placed insurance programs and examine "other lines of insurance where reverse competition is rampant, such as auto force-placed insurance, credit insurance, debt cancellation products and title insurance. Those are all real abuses that need to have a deep look [at]."

Lawsky invited Hunter back to address these other insurance products.

Hunter said during the hearing that force-placed homeowners insurance "adds to the economic stress on borrowers" with high-premium rates that are not actuarially justified.

He said, generally, the losses the insurers suffered did not justified rates that are sometimes three to four times what homeowners pay for coverage through private carriers that they secure on their own.

Hunter said the force-placed programs suffer from a combination of cozy relationships between insurers and lenders, and a kickback scheme that benefits banks using the insurance companies.

Hunter called on regulators to require these carriers to use a strictly-enforced minimum-loss. He says out of every dollar borrowers pay for insurance, 80 cents should be paid out of the insurer to cover losses.

Failing that, regulators should demand rate filings and prohibit the insurers from passing on kickbacks or other unjustified charges.

"Consumers urgently need your help," said Hunter, adding that he hoped the state's findings would help educate the rest of the country.

In earlier testimony, Lawsky and other regulators heard from four homeowners who paid considerably more for the force-placed insurance than what they later discovered they would pay in the admitted market.

Many spoke about the economic stress they suffered when the coverage was forced on them. In some cases, carriers either charged customers retroactively for coverage or ignored evidence of insurance when it was presented to the carrier.

Often, they said, the force-placed insurance premiums increased their mortgage payments significantly and put them close to delinquency.

It was not until they consulted with an attorney that they discovered they were unnecessarily being forced to purchase insurance they could secure for less elsewhere.

"If they were not lucky enough to find a lawyer, this would have been a disaster," Lawsky remarked at the close of the homeowners' testimony.