Published: Saturday, June 07, 2008 
The Color Of Premiums Were Not Always Green
By Jim Robinson
...Not Always Green
The Color Of Premiums Were Not Always Green!
Auburn Mountain is about nurturing and growing the future Financial Services Professionals. It is our wish that we bring hope, wisdom, knowledge and best practices to all subscribers and visitors. With this said, we must speak of a past practice of the insurance industry in America. It is important that you hear the truth about the misdeeds and also the truth about the intensity of courage the industry has had to correct the injustices it imposed upon a segment of it’s customers and clients.
From the 1930's until the early 80s, at least 30 or more life insurance companies engaged in the practice of charging “race based insurance premiums”. This practice involved “burial policies” and/or “industrial life policies”. The typical “race based insurance” case involves an insurance policy with a relatively low face value (typically under $5,000.00). The consumer typically bought these policies to simply cover the costs of their funerals. The premiums for these life insurance contracts were as much as 35% higher than for white policyholders. The premises was African Americans had shorter life expectancies. Hence they were charged higher rates.
The Kings Of Debit (Home Service)
Until the 1960s, MetLife (Metropolitan Life) and Prudential were the leading distributors of these small death benefits (but high weekly premiums) home service/ debit/"industrial life" insurance. Some companies continued to charge higher premiums even into the 1980s.
Courage To Correct The Injustices
The National Association of Insurance Commissioners -NAIC the organization of insurance regulators from the 50 states, the District of Columbia and the four U.S. territories initiated investigations that facilitated these settlements. Of course to be sure, the attorneys had their day in court. The important point is that justice prevailed. Justice did in fact come at a price.
The Color Of Justice is Green!
The two biggest settlements originated from:
- American General Life and Accident Insurance Co of Nashville Tenn
- Metropolitan Life Insurance Company.
American General Life and Accident Insurance
American General Life and Accident Insurance Co., of Nashville, Tenn which is now a part of AIG
www.aig.com) agreed in the year 2000 to pay $250 million in a case involving 9.1 million policies. This involved industrial life insurance policies sold by companies American General acquired over the years. They AIG companies were
- Equitable Life Insurance Company
- Gulf Life Insurance Company
- Herald Life Insurance Company
- Home Beneficial Life Insurance Company
- Home State Life Insurance Company
- Independent Life and Accident Insurance Company
- Industrial Life Ins. Company
- Interstate Life and Accident Insurance Company
- Knight's Life Insurance Company
- Liberty Life Insurance Company
- Liberty National Insurance Company
- Life and Casualty Insurance Company of Tennessee
- National Life and Accident Insurance Company
- Southeast Life Insurance Company
- Victory National Life Insurance Company
- Wilson National Life Insurance Company
AIG also agreed to voluntarily contribute $2 million to the National Association for the Advancement of Colored People (NAACP, Go To: www.naacp.org
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Categories: Consumer
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