Sunday, June 25, 2000

Insurance settlement affects thousands in Ky.

By Joseph Gerth
The Courier-Journal

        Nearly 10,000 people in Kentucky, most of them African-Americans who paid more for burial insurance than white customers, stand to benefit under a $206 million settlement with a national insurance company.

        It hasn't been determined how much of the settlement will go to Kentucky policyholders, who are only a fraction of the more than 1 million people affected around the country.

        The Kentucky Department of Insurance is trying to determine the identities of the 9,116 people in Kentucky who bought such policies from companies now owned by the American General Life and Accident Insurance Co. of Nashville, Tenn. By the end of the year, American General is expected to contact all 1.2 million policyholders across the country and make restitution.

        Policyholders will be eligible for higher insurance payoffs, lower premiums and small refunds.

        The $206 million settlement announced Wednesday resulted from an investigation by the Florida Department of Insurance that found insurance companies, dating to the 1940s, charged higher rates to African-Americans and to whites who were part of predominantly black insurance groups.

        Such policies were sold to at least 1,176,625 people throughout the country by various small insurance companies eventually acquired by American General.

        The company, which itself did not engage in race-based pricing, has bought at least 11 insurance companies that sold such policies. It told Florida regulators that it didn't know that blacks were still paying the higher premiums on policies purchased decades ago.

        The companies acquired by American General include Gulf Life Insurance Co., Independent Life and Accident Insurance Co., Life and Casualty Insurance Co. of Tennessee, National Life and Accident Insurance Co., Home Beneficial Life Insurance Co., Equitable Life Insurance Co., Southeast Life Insurance Co., Victory National Life Insurance Co., Wilson National Life Insurance Co., Interstate Life and Accident Insurance Co., and Herald Life Insurance Co.

        Besides the $206 million settlement, American General also will pay fines totaling $7.5 million to all 50 states and the District of Columbia. And it will give $2 million to the National Association for the Advancement of Colored People.

        Kentucky's share of the fine will be $60,500. Some states will get as little as $100 while Florida, Georgia and Virginia will receive more than $1 million each.

        Florida had 184,587 victims of race-based pricing; Georgia was next with 176,930 policyholders; and Virginia had 172,302 of the policyholders.

        The small, inexpensive life insurance policies, have traditionally been called “burial insurance” or “industrial insurance.” They often were sold door-to-door by salesmen.


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