QBE Insurance

Last updated

QBE Insurance Group Limited
Type Public
ASX:  QBE
Industry Insurance
FoundedJanuary 1886;135 years ago (1886-01)
Headquarters388 George Street
Sydney, New South Wales, Australia
Key people
Mike Wilkins (Chairman) [1]
Andrew Horton (Group CEO)
Products General insurance and reinsurance services
RevenueIncrease2.svg $11.650 billion (2018) [2]
Increase2.svg $567 million (2018) [3]
Total assets Decrease2.svg $39.582 billion (2018) [4]
Total equity Decrease2.svg $8.400 billion (2018) [5]
Number of employees
12,452 (2018) [6]
Website www.qbe.com

QBE Insurance Group Limited is a general insurance and reinsurance company listed on the Australian Securities Exchange (ASX) and headquartered in Sydney. The company employs more than 11,700 people in over 27 countries.

Contents

Across its operations, QBE offers commercial, personal and specialty products and risk management solutions. The company states its purpose is to give people the confidence to achieve their ambitions.

History

Originally called the North Queensland Insurance Co, QBE was founded in 1886 in Townsville, in northern Queensland by two Scottish migrants, James Burns], founders of shipping company Burns Philp and Company. [7]

QBE was listed on the Australian Stock Exchange in 1973 from the merger of three companies whose names represent the letters of the combined company, Queensland Insurance, Bankers' and Traders' Insurance Company, and Equitable Life and General Insurance Co., and its founding chairman was J.D.O. Burns. [8] [9]

Since then, QBE has continued to acquire many companies. For example, in February 2007, it acquired Mexican insurer Seguros Cumbre SA de CV, whose net tangible assets were estimated at $26 million, and American insurer General Casualty Insurance. [10] In 2011, QBE purchased Balboa Insurance of California from the Bank of America. [11] [12] [13] [14]

QBE Insurance is also known for its sponsorship of sports teams, including the Sydney Swans of the Australian Football League, the Sydney Roosters of the National Rugby League, the NSW Swifts of netball's trans-Tasman ANZ Championship, the Perth Glory of the A-League and provincial New Zealand Rugby team, North Harbour. QBE is the official insurance partner of England Rugby and the Argentine Rugby Union.

Richard Pryce is currently the Interim Group CEO, [15] with QBE announcing Andrew Horton will assume the role of Group CEO, commencing September 2021. [16]

Previous Group CEOs of QBE include Pat Regan (2014–2018) and John Neal (2012–2017). Frank O’Halloran, who worked for QBE for more than 35 years, was Group CEO from 1998 to 2012. Prior to this O’Halloran was Director of Operations from 1994 to 1997, Director of Finance from 1987 to 1994 and Chief Financial Officer from 1982 to 1987.

In April 2020, QBE Insurance group appointed Jason Harris as CEO, International, succeeding Richard Pryce who is currently Interim Group CEO and is set to retire at the end of 2021. [17]

Force-placed insurance controversy

Maintaining a property insurance policy is one of the most common conditions imposed upon anyone who borrows money to purchase a house. [18] If a borrower allows such a policy to lapse, US lenders will purchase force-placed insurance for the property owner (also called lender-placed insurance, or collateral protection insurance) [19] The use of force-placed insurance by lenders is an ongoing practice that, in the wake of the financial crisis, has become increasingly common, [20] [21] [22] being cited by many experts as the cause of foreclosures themselves. [23] The coverage prevents gaps in insurance, which is required by the terms of most mortgages. The financial industry justifies higher premium costs of force-placed insurance policies because of the heightened insurance risk of borrowers who aren’t paying for their own insurance. [24] Opponents of the product consistently provide statistics in opposition to these statements, [25] [26] citing kickback payouts and loss ratios that are much lower than the rest of the insurance industry. [27]

Force-placed insurance policies fell under regulatory scrutiny when the New York State Department of Financial Services (DFS) launched an investigation into the lender-placed insurance industry that has so far led to settlements with QBE and Assurant [24] [28] [29] Although testimony in these hearings discussed "reverse competition" and kickbacks from Assurant to its banking clients, [30] [31] In response to the settlement, DFS Superintendent Benjamin Lawsky stated, "Prices should not be pushing up and up, pushing borrowers over the foreclosure cliff." [32]

In January 2013, the Consumer Financial Protection Bureau issued new mortgage servicing rules that ensures borrowers are warned in advance of force-placed insurance's cost and prevent banks from force-placing policies on many escrowed loans. “All consumers will receive protections before a servicer may impose a charge for a force-placed insurance,” an agency spokeswoman wrote. [33] In October 2012, QBE and California agreed to a rate reduction for lender-placed insurance, with an average savings to policyholders of $577 annually. [34]

The Federal Housing Finance Agency, which oversees Fannie Mae, Freddie Mac, and the federal home loan banks, has looked into the relationships between force-placed insurers and their clients, [35] determining the relationships to be fraudulent and banning any future service kickbacks. [36] In addition, the Florida Office of Insurance Regulation is looking into the practice. [37]

Related Research Articles

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Title insurance is a form of indemnity insurance predominantly found in the United States and Canada which insures against financial loss from defects in title to real property and from the invalidity or unenforceability of mortgage loans. Unlike some land registration systems in countries outside the United States, US states' recorders of deeds generally do not guarantee indefeasible title to those recorded titles. Title insurance will defend against a lawsuit attacking the title or reimburse the insured for the actual monetary loss incurred up to the dollar amount of insurance provided by the policy.

Foreclosure

Foreclosure is a legal process in which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments to the lender by forcing the sale of the asset used as the collateral for the loan.

A reverse mortgage is a mortgage loan, usually secured by a residential property, that enables the borrower to access the unencumbered value of the property. The loans are typically promoted to older homeowners and typically do not require monthly mortgage payments. Borrowers are still responsible for property taxes and homeowner's insurance. Reverse mortgages allow elders to access the home equity they have built up in their homes now, and defer payment of the loan until they die, sell, or move out of the home. Because there are no required mortgage payments on a reverse mortgage, the interest is added to the loan balance each month. The rising loan balance can eventually grow to exceed the value of the home, particularly in times of declining home values or if the borrower continues to live in the home for many years. However, the borrower is generally not required to repay any additional loan balance in excess of the value of the home.

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Lenders mortgage insurance (LMI), also known as private mortgage insurance (PMI) in the US, is insurance payable to a lender or trustee for a pool of securities that may be required when taking out a mortgage loan. It is insurance to offset losses in the case where a mortgagor is not able to repay the loan and the lender is not able to recover its costs after foreclosure and sale of the mortgaged property. Typical rates are $55/mo. per $100,000 financed, or as high as $125/mo. for a typical $200,000 loan.

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Second mortgage

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Real Estate Settlement Procedures Act

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Real estate owned

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Collateral Protection Insurance, or CPI, insures property held as collateral for loans made by lending institutions. CPI, also known as force-placed insurance and lender placed insurance, may be classified as single-interest insurance if it protects the interest of the lender, a single party, or as dual-interest insurance coverage if it protects the interest of both the lender and the borrower.

A mortgage servicer is a company to which some borrowers pay their mortgage loan payments and which performs other services in connection with mortgages and mortgage-backed securities. The mortgage servicer may be the entity that originated the mortgage, or it may have purchased the mortgage servicing rights from the original mortgage lender. The duties of a mortgage servicer vary, but typically include the acceptance and recording of mortgage payments; calculating variable interest rates on adjustable rate loans; payment of taxes and insurance from borrower escrow accounts; negotiations of workouts and modifications of mortgage upon default; and conducting or supervising the foreclosure process when necessary.

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References

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