The lead plaintiff is Lisa Macomber?a Travelers policyholder who suffered an auto accident during the late 1980s in Connecticut and had settled a personal-injury claim with the insurer for $70,000 in cash plus a structured payout of a $1,000 a year for life with a 30-year guaranty.

In her suit, Ms. Macomber alleges that Travelers Property Casualty "conspired to short-change claimants." Her action seeks a recovery on behalf of other policyholders who had similarly received some part of their settlement with periodic payments funded with an annuity.

Ms. Macomber's lawsuit originally was filed in federal court, but the judge dismissed federal claims, declining jurisdiction over state claims. The suit was refiled in state court in 1999.

According to a decision certifying the class action, Ms. Macomber's structured portion of the settlement was funded through Travelers Property Casualty's purchase of an annuity insurance product.

Travelers, when offering annuities as part of personal-injury claim settlements, usually bought them from Travelers Life and Annuity Company, now part of New York-based Citigroup Inc., with services from a number of Travelers-owned brokers, the decision noted.

Ms. Macomber contends that Travelers Property Casualty routinely spent less on the purchase of annuities than they agreed to spend in settlements and that this practice "short-changed" the claimants.

Her complaint alleges that the brokers involved in the annuity transactions?including Travelers Equity Sales and Salomon Smith Barney Holdings Inc., now also part of Citigroup?routinely paid or "rebated" up to 50 percent of their commissions to Travelers Property Casualty.

The suit contends that alleged short-changing and rebating techniques allowed Travelers Property Casualty to overstate the actual dollar amounts it used to fund structured settlements.

Persons eligible to participate in the class action are those who settled claims against Travelers Property Casualty since 1982 through structured settlements that involved such activities.

"All putative class members arguably have been short-changed by the practice of brokers rebating portions of their four percent commissions," according to the decision, "while others have allegedly been short-changed because Travelers Casualty disclosed amounts greater than the true amounts actually invested on behalf of claimants in structured settlements."

The suit contends Travelers violated the Connecticut unfair trade practices act?which is combined with the Connecticut unfair insurance practices act. It also alleges civil conspiracy, breach of contract and unjust enrichment.

A spokesperson for the St. Paul Travelers, while declining to discuss the charges in detail, said the company believes Ms. Macomber's case has no merit.

"In terms of our perspective on the ruling [on class-action status], we respectfully disagree with the judge's ruling," Marlene Ibsen told National Underwriter. She added, however, that "this is just one step in the process and the merits of the case have not yet been addressed.

"We continue to believe that the allegations made by the plaintiff in the case are without merit."

Ralph Stone, attorney for Ms. Macomber, remarked that the suit could now include several thousand people who had previous settlements with Travelers. "We are in the process of trying to figure out the exact number and are in the process of identifying those people from around the country," he related. Mr. Stone added, "we are pleased with the court's careful analysis of the class certification issue, and we look forward to further prosecuting this important case on behalf of the class."

He also said that since Travelers Life is now part of the Citigroup's umbrella of companies, Citigroup could end up paying for part of potential liabilities, as is the St. Paul Travelers, which is now the parent corporation of Travelers Property Casualty. "Those companies are potentially on the hook for any liability down the road," Mr. Stone told National Underwriter.