Tags: Citi | Property | Insurance | lawsuit

Citi Settles Property Insurance Suit for $110 Million

Thursday, 06 Feb 2014 09:21 AM

Citigroup Inc. has agreed to pay $110 million to thousands of homeowners who were forcibly charged expensive property insurance premiums, a court filing showed, as several U.S. banks and insurers were criticized by regulators over such practices.

The class-action lawsuit filed in a New York federal court involves "force-placed insurance," which is placed by a bank or other mortgage lenders to protect their interests in a property if the homeowner's insurance lapses.

The class members who were charged for force-placed hazard insurance will receive back 12.5 percent of the premium upon submitting a claim, as per an agreement between Citigroup and the plaintiffs.

The agreement, which needs to be approved by the court, calls for Citi to stop accepting commissions for force-placed insurance for a period of six years from the effective date of the settlement.

Banks have been under increasing scrutiny from regulators over force-placed insurance. Mortgage agreements give lenders the right to force-place insurance, but regulators have accused banks and insurance companies of pushing up policy prices with improper commission and reinsurance agreements.

In September, JPMorgan Chase & Co and the nation's largest force-placed insurer Assurant Inc agreed to a $300 million settlement..

One of Citi's unit that deals with the insurance received a 15 percent commission on hazard insurance premiums during the proposed settlement class period, according to the filing.

Citi has also agreed to refund 8 percent each of force-placed flood insurance premiums and force-placed wind insurance premiums, even though no commissions were paid to Citi or its affiliates on flood or wind insurance.

The plaintiffs in total were charged about $758 million in hazard insurance premiums and $173 million in flood insurance premiums, according to the filing.

 

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Personal-Finance
Citigroup Inc. has agreed to pay $110 million to thousands of homeowners who were forcibly charged expensive property insurance premiums, a court filing showed, as several U.S. banks and insurers were criticized by regulators over such practices.
Citi,Property,Insurance,lawsuit
282
2014-21-06
Thursday, 06 Feb 2014 09:21 AM
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