JPMorgan Chase and a large insurer have agreed to a $300 million settlement to resolve accusations that they forced homeowners into buying overpriced property insurance and entered into kickback arrangements that inflated policy prices.
The class-action lawsuit being settled â€" one of several against large banks over such so-called force-placed insurance policies â€" said the improper practices unjustly enriched JPMorgan and the insurer, Assurant Inc., by more than $1 billion since 2008.
JPMorgan and Assurant did not admit any wrongdoing as part of the settlement, which was in documents filed late on Friday in federal court in Miami.
“The settlement will have no expected impact on our financials,†Amy Bonitatibus, a JPMorgan spokeswoman, said. She said the bank had ended a reinsurance pact with Assurant.
The settlement calls for the bank to stop accepting commissions for force-placed insurance. It is the first settlement nationally to result from several cases against banks in the federal court in Miami that involve force-placed insurance.
Banks have been under increasing regulatory scrutiny over such insurance, which is placed by a bank or other mortgage lender to protect its interests in a property if the homeowner’s insurance lapses.
Mortgage agreements give lenders the right to force-place insurance, but regulators have accused banks and insurance companies of raising the price of policies with improper commission and reinsurance pacts.
Assurant says it places insurance in accordance with the terms of the mortgage and applicable regulations. “The settlement is subject to court approval, and we are unable to offer further comment while the matter is pending,†Assurant said.
Assurant placed about 1.3 million policies for JPMorgan Chase, collecting more than $2.4 billion in force-placed premiums since 2008, court documents said.
In March, it agreed to pay $14 million to settle an inquiry by the New York insurance regulator over arrangements with banks and mortgage servicers. It did not admit or deny wrongdoing.
