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New Questions about Banks' Force-Placed Insurance Deals

Because state limits on Assurant's pricing restrict the commissions it pays to bank clients, a case can be made that Assurant's regulated status is a competitive disadvantage.

"If there's the ability to write coverage on a nonadmitted basis, then definitely there's an advantage to a company like QBE," said David Blades, an insurance analyst for A.M. Best.

QBE's deal for Balboa, which generated $1.5 billion of gross premiums last year, would make it one the biggest force-placed insurers in the U.S. It's unclear how the company will manage its future force-placed sales in Florida and elsewhere once the purchase is complete. Belinda Miller, a deputy commissioner of the Florida Office of Insurance Regulation, said she doubted QBE would switch Balboa's existing force-placed portfolio over to surplus lines, though she said the company has not indicated its plans.

Neither QBE nor Bank of America, which will distribute its insurance, offered any comment. But insurance industry analysts said they believed QBE was in the middle of a big push to expand its market share.

"I think when the Balboa deal closes we'll get a better sense of how they're looking at this short and long term, of how they're going to attack the market," Blades said.