The Florida Office of Insurance Regulation issued a Consent Order to Praetorian Insurance Company, the state's second largest force-placed insurance provider, requiring the insurer to modify its business practices related to this type of coverage.

Under the Consent Order, Pennsylvania-based Praetorian must agree to submit annual rate filings for its force-placed insurance program until further notice from the OIR. According to a press release from the OIR, Praetorian also needs to implement a number of business reforms within six months, including:

• Notifying all current borrowers by mail and within 120 days of the execution of the Consent Order to inform them about alternative options available for force-placed coverage;
• Prohibiting the payment of commissions to a mortgage servicer on force-placed policies obtained by that servicer;
• Prohibiting the payment of contingent commissions based on underwriting profitability or loss ratios to any servicer or entity affiliated with a servicer;
• Prohibiting the issuance of force-placed policies on mortgaged property serviced by an affiliate;
• Prohibiting the issuance of reinsurance on force-placed policies with a captive insurer of any mortgage servicer;
• Prohibiting the provision of free or below-cost outsourced services to a mortgage servicer; and
• Prohibiting the payment of any incentive to a mortgage servicer as an inducement to secure force-placed business.

Similar reform measures are already being implemented by American Security Insurance Company, the state's largest force-placed insurer, after the OIR issued a Consent Order this past Oct. With these two orders, the OIR has instituted new requirements for over 90% of the force-placed market in Florida.