Wells Fargo and insurer QBE have agreed to a $19.3 million settlement over claims that they overcharged nearly 25,000 homeowners in Florida on lender-placed insurance policies. To protect investors, banks purchase the coverage on behalf of homeowners who allow their own insurance to lapse; and the cost of the policies is then funneled back to the homeowners and investors. Wells Fargo's exclusive arrangement with QBE, which mined the bank's records to identify homeowners with lapsed policies, allegedly caused homeowners to pay five to six times what they would have if the policies had been priced competitively. QBE's policies were based very little on the underlying properties and instead reflected Wells Fargo's entire portfolio of mortgages in Florida. Under the terms of the settlement, Wells Fargo and QBE would refund 25 percent of amounts paid by borrowers or credit that amount to borrowers who have been billed but not yet paid.
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