Premiums for so-called force-placed insurance have more than tripled since 2004, producing enormous profits for insurers and the banks that take out policies when a homeowner fails to maintain coverage required by the mortgage, according to New York regulators.

In some cases, the premiums are “exponentially higher” than regular homeowners insurance and can push homeowners into foreclosure, Department of Financial Services Superintendent Benjamin Lawsky said last Thursday at the start of public hearings on insurance rates. Such premiums rose from $1.5 billion in 2004 to $5.5 billion in 2010 during the U.S. housing crisis and have probably risen since, he said.

A handful of homeowners told regulators about insurance rates they were forced to pay that were up to three times higher than their original policies, making it harder to keep their homes. Some said they didn’t get notices about the changes until they got higher bills for their escrow accounts. Consumer advocates said similar stories were widespread, and that homeowners also end up with policies that don’t cover their personal injury liability or their house contents.

On a typical homeowner’s policy, at least 63 cents of every dollar pays claims, Lawsky said. But with force-placed policies, he said, the loss ratios “drop precipitously,” often below 25 cents and sometimes as little as 17 or 18 cents on the dollar pays claims, while the rest is mostly profit.

While acknowledging the importance of maintaining coverage, the

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