LandAmerica Financial Group has agreed to refund title insurance premiums to 922 Colorado residents who state regulators said were victims of captive reinsurance practices that provided kickbacks to lenders and home builders.

LandAmerica Financial Group has agreed to refund title insurance premiums to 922 Colorado residents who state regulators said were victims of captive reinsurance practices that provided kickbacks to lenders and home builders.

The $241,000 settlement with the Colorado Division of Insurance includes $139,000 in premium refunds, $36,880 in penalties, $15,000 to reimburse the state for the cost of its investigation, and a $50,000 donation to a local charity that addresses low-income housing and foreclosure issues.

Colorado regulators say lenders and home builders affiliated with Citigroup and Ryland Home agreed to refer all of their title insurance business to LandAmerica, on the understanding that LandAmerica would “reinsure” the policies with businesses established by the lenders and home builders. Such “captive reinsurance” arrangements are designed to generate rebates or kickbacks for the lenders and home builders, which are prohibited under state and federal law.

Colorado insurance regulators opened an investigation into captive reinsurance practices in late 2004, with states around the nation following suit. In early 2005, First American Title Insurance Co. agreed to refund about $24 million to consumers nationwide, without admitting liability or wrongdoing.

LandAmerica has been settling allegations of illegal captive reinsurance practices on a state-by-state basis. Individual settlements with Virginia, California, Arizona, Nevada and Colorado total nearly $10 million, said Erin Toll, Colorado’s deputy insurance commissioner.

“The company has consistently from day one refused to deal with (states) together,” Toll said. “The last time I checked, there were 15 states pursuing (captive reinsurance investigations of LandAmerica). They will only do settlements with each state individually, so (individual settlements) never get the attention that the other (larger settlements) did.”

In a statement, LandAmerica said the company “is pleased to have reached a settlement with the Colorado Division of Insurance that benefits the state’s homeowners and looks forward to continuing our commitment to servicing the real estate needs of Colorado consumers.”

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