Tags: Insurer | Pays | Millions | for | Racial | Bias

Insurer Pays Millions for Racial Bias

Thursday, 02 May 2002 12:00 AM

The practice involved small burial insurance policies sold door-to-door in black neighborhoods for decades. Most of the 467,000 policies, also commonly called industrial life, were sold at least 30 years ago, but the companies continue to collect premiums from policyholders to this day.

Under terms of the settlement, Unitrin did not admit to any wrongdoing. "When I contacted Unitrin two years ago, they indicated that they wanted to reach a settlement that would provide appropriate relief to policyholders," said Illinois Director of Insurance Nat Shapiro. "While it is most regretful that these practices persisted for so long, I appreciate the company's cooperation in this process.

The policies typically were for several hundred dollars of coverage to pay for a funeral.

"I was amazed and deeply distressed when I found out there were consumers in modern America who were paying higher premiums because of the color of their skin, and I believe that we have secured a just recompense for them," Shapiro said.

Under the class-action settlement reached with Illinois, Florida, Louisiana, Missouri and Texas, three Unitrin subsidiaries – United Insurance Co. of America, Union National Insurance Co. and Reliable Life Insurance Co. – will pay $6 million to beneficiaries who never received a death benefit they were entitled to receive.

Five other states – California, Georgia, Minnesota, North Carolina and South Carolina – have 45 days to approve the settlement, which 33 other states and the District of Columbia are eligible to join.

Restitution will be offered to policyholders or beneficiaries who previously collected death benefits, surrendered their policy or were still paying premiums after 1960.

Additionally, Unitrin will pay $2.25 million to the states, a $1.25 million fine to be shared by the states and an additional $1 million in benefit enhancements to about 59,000 policyholders.

"The benefit enhancement was a way that all of us – the companies, the regulators, and the class counsel – could put our money where our mouths are for consumers," Shapiro said.

Copyright 2002 by United Press International.

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The practice involved small burial insurance policies sold door-to-door in black neighborhoods for decades. Most of the 467,000 policies, also commonly called industrial life, were sold at least 30 years ago, but the companies continue to collect premiums from policyholders...
Insurer,Pays,Millions,for,Racial,Bias
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2002-00-02
Thursday, 02 May 2002 12:00 AM
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