The state financial regulator in New York is currently conducting an inquiry regarding the possible overcharging of customers for force-place insurance, into large organizations such as Citigroup Inc. and Bank of America Corp.
The focus of the probe is the service known as force-place insurance, which requires the a loan provider to purchase an insurance policy in the circumstance that a homeowner is unable to maintain insurance premiums on the property. According to industry experts, this practice is becoming increasingly common.
The probe is being conducted by the office of the superintendent of the Department of Financial Services in New York state, Benjamin Lawsky. It also includes Wells Fargo & Co. as well as JPMorgan Chase & Co. The investigation involves discovering whether insurance companies and banks have been overcharging on this form of coverage. The source of this information has declined to be named.
Lawsky had previously been a New York State Attorney General’s Office official under the now state governor, Andrew Cuomo. While serving in that office, Lawsky had also taken part in other investigations into banks, such as the high profile probe into the American student loan industry.
The current inquiry is examining whether or not the policies that have been taken out by the financial institutions have been sold by their own affiliates. Also to be identified is the potential for kickbacks from companies that are unaffiliated with the banks.
One of the primary focuses of the investigation will be specifically aimed at Bank of America and a possible conflict with a unit it owned until 2011 called Balboa Insurance.