American General Settles Class-Action Suit

One of the nation’s biggest life insurance companies agreed to pay $206 million to settle allegations it overcharged millions of mostly poor, black customers for burial insurance because of their race. American General Life & Accident Insurance Co., based in Nashville, Tenn., settled after being hit with a federal class-action lawsuit and being threatened by sanctions from state insurance commissioners, mostly in the South. Under the settlement, American General will also pay $2 million to the National Assn. for the Advancement of Colored People and $7.5 million in penalties to several states. Burial insurance helps pay for the policyholder’s funeral and burial. The American General policies were often for $1,000 or less. The company said that it believes the settlement is fair and that it has “moved swiftly and responsibly to correct the regrettable historical practice of differential pricing.” Holders of 9.1 million policies nationwide will be eligible for some type of relief.