Wednesday, July 19, 2000
Insurer discrimination alleged
Western-Southern among firms on notice
By Jeff McKinney
The Cincinnati Enquirer
Some of the nation's largest insurers, including Cincinnati's Western-Southern Life Insurance Co., have been ordered to stop selling policies that officials say discriminate against blacks.
Almost a month after American General, the nation's fourth-largest life insurer, agreed to pay more than $215 million in penalties and restitution to re solve claims that it charged black customers more for coverage than white ones, regulators in Florida and Georgia said they suspected that some companies were continuing to discriminate.
The regulators said they thought that at least four companies were continuing to discriminate in premium collections in Georgia and that at least one was doing so in Florida. But they said their investigations were preliminary and that the number might grow.
Both Bill Nelson, the insurance commissioner in Florida, and John W. Oxendine, the commissioner in Georgia, issued orders Monday that the practice be stopped immediately. The orders apply to 28 companies in Florida and 23 in Georgia. Ignoring the order could lead to fines and revocation of sales licenses.
Neither state would identi fy companies suspected of discrimination. But they said that while they developed their cases, they wanted to pre-empt further discrimination.
Western-Southern said Tuesday that it has policyholders with so-called industrial life insurance coverage, including those that did business directly with Western-Southern or other companies that it has acquired through the years.
Western-Southern was included in the action because it had 47,000 such policy holders in Florida as of 1999, collecting almost $27 million in premiums, said Don Pride, spokesman for the Florida insurance commission. It has a very small presence in Georgia, collecting less than $5,300 in such premiums last year.
“We simply ordered Western-Southern to look at their books,” Mr. Pride said. “We don't have evidence of them doing anything wrong.”
Herb Brown, Western-Southern's spokesman, said Western-Southern stopped issuing industrial life insur ance policies in 1982. He said the company discovered in 1988 that it had some policies that had been issued by companies that it re-insured. He said Western-Southern then made restitution to all of those policyholders at the time.
He said the company increased the face and cash values of those policies so that they would equal the amount of premiums made by black policy holders.
The New York Times contributed to this report.
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