Citigroup has agreed to pay $110m 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.
Reuters reports that 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% 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.
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