Prudential Sets Up Toll-free Number for Policyholders Who May Have Paid Race-based Premiums

Business Wire, July 12, 2000

Business/Insurance Editors

NEWARK, N.J.--(BUSINESS WIRE)--July 12, 2000

The Prudential Insurance Company of America today announced that it has established a toll-free number for policyholders who may have paid race-based premiums for individual life insurance purchased in the distant past.

The toll-free number is available for people who bought their policies prior to 1951 and are unsure if those policies were later adjusted through long-standing company efforts. Those efforts included increasing benefits or refunding extra premiums to remove the effects of past race-based underwriting.

Prudential rejected the practice of race-based underwriting many years ago. But like many other insurance companies, Prudential, at certain points in its history, used race-based underwriting. While the practice of race-based underwriting is clearly unacceptable by today's standards, Prudential acted in accordance with what were then industry standard and generally accepted actuarial and underwriting practices based on life expectancy. In 1950, race-based underwriting was stopped for good. Today, Prudential does not collect one extra penny in race-based premium.

Prudential has taken a number of steps over the years to equalize the premiums and/or benefits on its in-force life insurance policies that had been rated based on race. By 1973, the company had a long-standing practice of removing the effect of race-based ratings when calculating claim benefits on weekly premium policies.

In 1978, Prudential extended this practice to the other lines of its individual insurance business and began to return with interest all premiums that had been added on the basis of its pre-1951 racial underwriting. This was done whenever a case presented itself as a result of inquiry by the policyholder, at the time of policy change, at the time a claim was made, or when a policy was surrendered.

Prudential believes the steps the company took addressed most of these cases. However, based on the research completed to date, the company cannot say with certainty that everyone was reached. To help in this effort, Prudential has taken the voluntary step of setting-up a special toll-free number 1-800-201-7189 for people with policies issued before 1951, who believe they may have been impacted by race-based underwriting and who would like the company to review their policies.

"Much has changed in our country, our industry and our company in the last 125 years. Today, Prudential's commitment to diversity is unwavering. The fact that life insurance was once sold using race-based underwriting is difficult to understand and is completely unacceptable by today's standards," said James Avery, President of Prudential's Individual Life Insurance business. "Prudential is committed to taking the appropriate steps to put into place mechanisms to address any remaining concerns related to this important issue."