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AL HB58
Bill
Status
3/6/2023
Primary Sponsor
Corley Ellis
Click for details
AI Summary
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Establishes a regulatory framework for lender-placed insurance on mortgaged real property, based on National Association of Insurance Commissioners (NAIC) model act, to maintain separation between lenders and insurers and minimize unfair competitive practices.
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Prohibits insurers and insurance producers from owning the mortgaged property, servicing it, compensating lenders or servicers, sharing premiums/risks, offering contingent commissions, or providing free/below-cost services in connection with lender-placed insurance.
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Requires lender-placed insurance coverage be based on replacement cost value of property using last known coverage amount (LKCA), with premiums calculated accordingly; excess replacement cost coverage over unpaid principal balance must be paid to mortgagor.
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Mandates all policy forms, certificates, and premium rate schedules be filed with the Commissioner of Insurance; insurers with $100,000+ annual premium must report annually on loss ratios, earned premiums, and expenses, and refile rates if loss ratios fall below 35 percent for two consecutive years.
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Provides Commissioner enforcement authority with penalties of up to $1,000 per violation ($100,000 aggregate) for standard violations, or up to $25,000 per violation ($250,000 aggregate) for flagrant violations, plus potential license suspension or revocation; allows judicial review in Montgomery County Circuit Court.
Legislative Description
Relating to insurance; to define lender-placed insurance on real property and provide a framework for regulating lender-placed insurance; to require separation between lenders and insurers and define unfair competitive practices in the sale, placement, solicitation, and negotiation of lender-placed insurance; to further provide for the term of the lender-placed insurance on real property and for the calculation of coverage and payment of premium; to provide for prohibited practices in the issuance of lender-placed insurance on real property; to require certain details of the insurance to be set forth in the policy or certificate of insurance; to require for the filing and approval by the Department of Insurance of the forms and rates to be charged for the insurance; to provide for the enforcement of the act and penalties for violations of the act; and to provide for judicial review of orders of the Commissioner of Insurance.
Real property, mortgages, property insurance, lender-placed insurance, regulation by Insurance Department
Last Action
Carry Over by House Insurance
3/22/2023