In Wake of Gang Violence, Insurers Come Knocking : Shootings: Salesmen waving newspaper clippings drum up business in crime-torn neighborhoods.

Insurance salesmen are going door-to-door through some of Los Angeles’ most crime-torn neighborhoods, attempting to market life insurance policies to families with members who belong to street gangs or who are otherwise vulnerable to random street violence.

Waving newspaper clippings that chronicle gang bloodshed, the $10-a-month policies are presented as a hedge for prospective clients against the possibility of deadly violence.

The life insurance policies sold are small, typically ranging from $5,000 to $10,000. Most are purchased simply to soften the financial blow of funeral services averaging $4,000.

“We are doing fantastic business,” said Magdy Barsoum, district manager for the Inglewood branch office of American National Insurance Co., one of the nation’s larger life insurance companies with $3.6 billion in assets. Parents “are finding out that a lot of young kids are dying from gangs, shootings and accidents. We pay out $70,000 to $80,000 a month on violent deaths.”

The sales strategy leaves some members of the insurance industry--including Barsoum’s own superiors at corporate headquarters in Galveston, Tex.--uneasy. Particularly unsettling is one method Barsoum said his 30 agents employ to hunt for prospective clients: scanning newspapers for articles about drive-by shootings and other crimes, then taking the newspaper accounts into the stricken neighborhood to persuade people to purchase insurance before the next round of bloodshed.

Betty Combs, spokeswoman for the California Assn. of Life Underwriters, called such marketing efforts “a sad commentary on our times” and added: “This is not the kind of practice we would support or what our code of ethics outlines as an appropriate practice. It is inappropriate to play on people’s fears. Life insurance is a product to be sold to families in need, not on what their fears are.”

Other industry experts, however, suggested that life insurance salesmen operating in violence-plagued neighborhoods inadvertently are striking a blow against the longtime insurance industry practice of territorial rating, which results in higher rates for low-income residents in so-called redlined communities.

“I have never heard of an insurance company actively seeking out a market like this,” said Gene Grabowski, spokesman for the American Council of Life Insurance in Washington. “But it sounds like they are being smart by providing a need.”

Barsoum said about 80% of his customers are on welfare, and 50% of the policies his office carries are for children, contrasted with about 10% five years ago. All of his clients pay their premiums in cash collected by American National agents. At least one other of American National’s four major competitors appears to be attempting a similar approach.

Barsoum said the daily newspaper and its crime coverage constitute “one of our best sources for customers. We take the newspaper out with us and say, ‘Look here, your kids are in danger.’ ”

Jerome Young of Golden State Mutual Life’s branch office in Compton uses a similar approach and said: “It lets them know that ‘This happened in your neighborhood--is your kid covered?’ ” However, Young said: “I at least wait a while, maybe a week (before visiting such a neighborhood). During grieving time, people don’t want to deal with things like that.”

American National spokesman Dan Wood, however, said the parent company did not approve of Barsoum’s methods as described.

“If there is any truth to that type of marketing it will be discontinued,” he said. “That’s certainly not the way we do business, never has been. We have agents in Haight Ashbury (San Francisco), East St. Louis, Dallas, Atlanta and Houston--all very, very tough neighborhoods too. None of them operate in a manner that they take newspaper articles out and say, ‘You should insure your children because of gang violence.’ ”

Leon Watkins, director of the Family Help Line in South-Central Los Angeles, compared the tactics of some life insurance salesmen to “people who loot after a disaster,” adding: “People need insurance, no doubt about it. But these people are working for a commission, not out of concern for the neighborhood.”

Still, to some residents of gang-infested neighborhoods, these insurance salesmen can seem a blessing.

Two weeks after her house was shot up by gangs, one South-Central Los Angeles woman was ready to talk business with the American National insurance salesman who came knocking.

The unemployed 43-year-old woman asked if it was possible to buy insurance policies for her mother, whom she said was addicted to crack cocaine, and for her 16-year-old son, whom she said was the probable target of six bullets fired into her kitchen in August.

The agent “said he didn’t care about all that; he said he could sign them up,” recalled the woman, who asked to be identified only as Darlene. Darlene said she was interested in the policy offer but was skeptical.

“I’m going to read the itty bitty print,” she said, “before I sign anything.”

No one has alleged that there are any illegalities involved in the practice of marketing life insurance in violence-plagued neighborhoods.

Peter Groom, legal counsel for the California Department of Insurance, pointed out that “there is an old saying in the life insurance industry: Life insurance is not bought, it’s sold.”

“Our department enforces the minimum standards of behavior established by the Legislature, and those standards for the most part do not include matters of good taste,” Groom said. “At what point does it become inappropriate to frighten people into buying insurance? I don’t have the answer to that.”

Barsoum said that, despite the payouts on such policies, his strategy has proven profitable for the company.

“We have a market the other companies have left for us,” he said.

American National, which has an “A-plus” rating in the insurance industry for superior overall performance, is one of the handful of “home service” agencies specializing in policies tailored to meet the needs of people of low or moderate means, said Grabowski, a spokesman for the industry’s Washington-based trade group.

A few of the insurance firms competing for policies in Los Angeles’ poorest communities claim to avoid hard-sell techniques, particularly in neighborhoods with high crime rates, which could pose a physical danger to their agents.

James Welch, district manager of United Insurance Co. of America’s South-Central Los Angeles office, for example, said, “We’re not going into a lion’s den for a buck.”

Acknowledging that two of his agents have been robbed in separate incidents over the past month, Barsoum smiled at such concerns, saying: “Other agents are scared to work in these areas. But my agents--I’m proud of them--they work until 10 or 11 at night.

“The people in these areas need us so they protect us,” he added.

American National agent Charles Hotetz, who joined the firm in May, works in what some consider the toughest neighborhoods of all--the federal housing projects of Nickerson Gardens and Jordan Downs.

Hotetz said he does not need newspaper clippings to sell policies in his turf. “Word gets around,” he said, while collecting debts and selling new policies in Jordan Downs. “I get a lot of referrals from relatives of clients.”

One of his newest customers was Darryl Redford, 21, who bought a $10,000 policy in July after seeing “too many drive-by shootings.”

“I’ve seen too many people get shot,” Redford said. “Heaven prevent me from getting caught in a cross-fire, but this insurance will bury me if I do.”

Neighbor Evelyn Martin, 53, already has a personal life insurance policy with American National. Now she wants one for her 21-year-old son because “sooner or later, kids around here will be shot at or shot, or stabbed or something.

“We see poor people getting killed that don’t have insurance,” Martin said. “Then their relatives have to go around with a cup in their hands.”