Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—S.D. N.Y.: Homeowner’s inflated insurance premium claim dismissed, (Nov 14, 2013)
Organizations Mentioned:American Security Insurance Company | Assurant | Assurant, Inc. | Cenlar Agency, Inc. | Cenlar FSB | Cenlar FSB, d/b/a Central Loan Administration & Reporting | Federal Home Loan Mortgage Corporation | Freddie Mac | Jorden Burt, LLP
By Linda O’Brien, J.D., LL.M.
A homeowner’s Florida Deceptive and Unfair Trade Practices claim against two insurance companies for placing hazard insurance on his home at an inflated premium rate was barred by the Filed Rate Doctrine, the federal district court in New York City has decided (Curtis v. Cenlar FSB, November 12, 2013, Cote, D.). Additionally, the Deceptive and Unfair Trade Practices Act did not apply to insurance companies.
In 2008, Thomas Curtis purchased a home in Florida that was secured by a mortgage from Federal Home Loan Mortgage Corporation and serviced by Cenlar FSB and Cenlar Agency, Inc. (collectively ‘Cenlar’). The mortgage required that the borrower insure the property against loss from hazards such fire, earthquakes and floods. Curtis obtained a homeowners insurance policy, however, the policy excluded coverage for damage caused by wind. In 2012, Cenlar informed Curtis that the terms of his mortgage required him to obtain wind coverage on the property. Following Curtis’ refusal to purchase wind coverage, Cenlar purchased a policy covering wind damage on his behalf from American Security Insurance Company, a subsidiary of Assurant, Inc., and billed his escrow account for the premium payment.
Curtis filed a complaint alleging violations of the Florida Deceptive and Unfair Trade Practices Act (FDUTPA) against American Security and Assurant for inflating the price of the insurance policy placed on his home. American Security and Assurant filed motions to dismiss for failure to state a claim.
The defendants argued that the Filed Rate Doctrine, which bars suits against regulated utilities on the grounds that the rates charged by the utility are unreasonable, barred Curtis’ claim that the actual cost of the property insurance placed on his home was inflated. The court held that, because American Security and Assurant were insurance companies whose rates were regulated by the Florida Office of Insurance Regulations, Curtis’ claim that the rates set by the defendants was not cognizable under the doctrine.
The court noted that the FDUTPA expressly provided that the law did not apply to persons or activities regulated by the Office of Insurance Regulation. Since Florida insurance companies were regulated by that Office, the FDUTPA did not apply to insurance companies and Curtis’ claim for improper insurance rate setting conduct must be dismissed, the court concluded.
The case is No. 13 Civ. 3007 (DLC).
Attorneys: Robert D. Helfand (Jorden Burt, LLP) for American Security Insurance Company and Assurant, Inc.
Companies: Cenlar FSB, d/b/a Central Loan Administration & Reporting; Cenlar Agency, Inc.; Federal Home Loan Mortgage Corporation; American Security Insurance Company; Assurant, Inc.
Cases: StateUnfairTradePractices NewYorkNews