Georgia insurance company agrees to pay $55 million to settle bias lawsuit

Jet, March 11, 2002

A Georgia insurance company agreed to pay $55 million to settle allegations it charged Blacks higher premiums for life insurance policies for more than 30 years.

Life Insurance Co. of Georgia will refund $51 million on about 2.5 million policies sold mainly in 12 Southern states. The settlement also covers policies sold by Southland Life Insurance Co., a Life of Georgia affiliate. The company will also pay a $4 million fine that will be divided among all 50 states.

Both companies are owned by the Amsterdam-based INS Group.

"Many years ago, it was common in the industry to base premiums on the disparity in life expectancy of different races. Life of Georgia and ING deeply regret the practice," the companies said in a statement. "Such practices are completely inconsistent with our current values and standards."

The settlement is subject to approval by a federal judge in Nashville, TN, where the case was granted class-action status (JET, Jan. 28).

Atlanta-based Life Insurance Co. has roughly 1 million customers in the Southeast.

A Georgia investigation found that Life of Georgia charged Blacks up to 35 percent more than Whites for the same or similar coverage from the 1950s through the 1970s.

The policies, called "industrial life insurance," were sold mostly door-to-door in the South to poor Blacks, often to cover burial expenses. The policies usually paid out no more than several hundred dollars.

"What Life of Georgia did was fundamentally wrong," said Georgia Insurance Commissioner John Oxendine. "To treat someone differently because of their race is reprehensible." The settlement calls for Black policyholders who paid the higher rates before 1966 to receive the difference between their premiums and those of White customers. Customers in later years would receive at least 70 percent of the premium differences.

The company stopped selling industrial life insurance in 1981.