Commissioner Poizner Obtains Benefits for Victims of Race-Based Insurance Policies

The California Department of Insurance (CDI), as part of a multi-state effort including Georgia, Florida, Ohio and Texas, has reached a settlement with Americo Life, Inc. to secure benefits for African-American consumers historically sold insurance policies using discriminatory practices, such as charging or collecting higher premiums for life insurance products based upon race; limiting the amount, extent or type of coverage available by race; and, assigning risk classifications based on race.

"Race-based pricing is not only illegal, it is morally abhorrent," said California Insurance Commissioner Steve Poizner. "I am very pleased to be part of an effort to return value to victims and their families which never should have been absent in the first place."

Although the affected policies were not sold directly by Americo, they were sold by insurance companies Americo subsequently acquired; a list of these 55 companies is attached. The settlement applies to policies issued by the named companies from 1928 to 1960 and were active, live policies after December 31, 1959. Possible victims, including heirs and beneficiaries, have four years to make a claim.

The settlement affects small face-amount life insurance policies, commonly known as industrial life or burial policies. For each person who is identified as a holder of an eligible policy, the company will add 25 percent to the face amount of the policy. In addition, policies which terminated by cash surrender, death, or endowment will receive a payment calculated at four percent per annum from the date of termination until the present.

The Texas Department of Insurance (TDI) was the lead regulatory negotiator for the five states that acted on behalf of all the members of the National Association of Insurance Commissioners. TDI's Race-Based Pricing Web Resource Page includes information on current and past settlements, a list of insurance companies involved in race-based pricing, and online claim forms and complaint forms. It can be accessed at: www.tdi.state.tx.us/consumer/rbsettlement.html.

From: California Department of Insurance (www.insurance.ca.gov)