Force-placed insurers operating in New York must lower the premiums they charge, the state's governor and superintendent of financial services announced on Tuesday.

The decree comes a month after New York grilled insurers and mortgage servicers over their handling of force-placed insurance, which banks purchase on the homes of mortgage borrowers who allow their own hazard policies to lapse. While meant to protect mortgage borrowers and investors, critics such as New York's DFS allege the product has turned into a vehicle for price-gouging and kickbacks from insurers to banks.

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