Insurance

Citibank hit with $18 million flood insurance penalty

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A U.S. banking regulator requires the bank to pay the fine for failure to comply with coverage requirements.

The Office of the Comptroller of the Currency announced this week that it was issuing a flood insurance penalty to Citibank. The bank was reprimanded for having failed to comply with mandatory flooding coverage regulations.

The fine is reported to be $18 million as a result of mandatory flood coverage purchase delays.

The U.S. banking regulator hit Citibank with the flood insurance penalty in response to mandatory coverage purchasing for properties where the mortgage customers were located in areas zoned as being flood prone.

According to the Office of the Comptroller of the Currency, without having purchased sufficient flood insurance policies, it meant that the bank waited too long to obtain the coverage required for its borrowers who were living in areas prone to flooding. Since the fine was issued, a Citi spokesperson stated that the bank was glad to resolve the issue. That said, she also underscored that it didn’t have any impact on the bank’s investors or borrowers.

The flood insurance penalty is a substantial one, but $18 million is far from Citi’s fine record.

Back in 2014, Citigroup was hit by another fine, but that one was for $110 million. In that case, thousands of its mortgage customers were required to pay for force placed insurance payments unnecessarily, according to a court filing. Though the practice of purchasing this coverage on behalf of certain homeowners is not uncommon among mortgage lenders, it was the way in which the expensive premiums were applied to the customers that was called into question.

At that time, the $110 million the bank was required to pay was in response to a class action lawsuit filed in a New York federal court. The members of the class received 12.5 percent of their premiums back after having submitted a claim. This was the result of a settlement reached between the plaintiffs and Citigroup.

Citi hasn’t given any indication that it intends to contest the flood insurance penalty. Instead, statements released by the spokesperson indicate that it is looking forward to putting the matter behind it.

Source:-liveinsurancenews