Insurance company nears settlement to pay Blacks up to $45 million

Jet, Jan 28, 2002

A Georgia insurance company is likely to pay more than $45 million to settle a lawsuit accusing it of charging Blacks higher premiums for decades.

Life Insurance Co. of Georgia said that it expects a settlement of the federal class-action suit "in the very near future."

The case stems from a Georgia investigation that found that Life of Georgia had charged Blacks up to 35 percent more than Whites for the same or similar coverage in the 1950s '60s and '70s.

The policies were primarily sold 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.

Under the settlement, the company has tentatively agreed to pay $45 million to $60 million, almost all of it in restitution to Black policyholders. The agreement also includes a much smaller amount in fines paid to the states, according to the Wall Street Journal. Payments could go to holders of up to 3 million policies.

At Life of Georgia, all non-Whites were lumped into a "substandard" category, said Georgia Insurance Commissioner John Oxendine, who is negotiating on behalf of insurance regulators from more than 40 states.

After 1960 the company continued to discriminate by targeting the policies to people in certain neighborhoods and occupations, such as maids and shoe-shiners, he said.

The settlement would be the latest in a series by insurance companies accused of overcharging Black and poor policyholders.

The largest was in 2000, when American General Life and Accident Insurance Co. agreed to pay $206 million for overcharging Blacks and the poor for burial insurance.

Last month, two South Carolina insurance companies, Atlantic Life Insurance Co. and Liberty Life Insurance Co., were ordered to pay millions of dollars to Black policyholders after state investigators concluded the companies had charged Blacks higher premiums for decades (JET, Jan. 14).