BofA, Provident Are Target of Bias Suit

An advocacy organization for the disabled sued Bank of America Corp. and Provident Life & Accident Insurance Co. on Tuesday, alleging they are discriminating against disabled people by effectively barring them from buying life insurance.

The suit addresses a long-standing practice that makes it difficult for people with disabilities--life threatening or not--to buy life insurance, said Sid Wolinsky, head of litigation for Disability Rights Advocates, a nonprofit law firm that filed the suit on behalf of Californians for Disability Rights, a nonprofit organization representing the state’s 4.5 million disabled.

Although Bank of America’s and Provident’s insurance offer was more discriminatory than most, disabled people are commonly turned down for coverage or charged excessive premiums, Wolinsky said.

This is all the more troubling now that the Americans With Disabilities Act has barred discrimination in a variety of other areas, he said.

“ADA has caused people with disabilities to be able to engage the real world in a real way. They work real jobs, they have real families, they drive real cars and they have real homes,” said Bill Freeman, president of the American Disability Assn. in Birmingham, Ala. “They need real insurance, just like everybody else.”

Charlotte, N.C.-based Bank of America said it had not seen the suit and could not comment. However, a bank spokesman stressed that though the bank is marketing insurance, it does not underwrite the policies and thus doesn’t set the terms. A spokesman for Chattanooga, Tenn.-based Provident said the company had sold that block of business to another insurer that had bought the right to use the Provident name. That company, Fortis Insurance, was not available for comment.

The American Council of Life Insurance, an industry trade group, said it could not comment on the suit. However, spokesman Jack Dolan said life insurance remains readily available to everyone.

“Very many people with disabilities get life insurance coverage,” Dolan said. “Indeed, life insurance is widely available to all people.”

The suit said Bank of America and Provident teamed up to sell life insurance to all the bank’s 3.8 million California checking account customers, sending solicitations that offered $1,000 in free term insurance, as well as the ability to apply for more coverage at group rates.

But to get the policies, customers must sign a “good health statement” so sweeping that it would prevent virtually anyone with a disability from obtaining insurance, Wolinsky said. About one in five Americans has some sort of disability, according to the Census Bureau.

Wolinsky acknowledged that insurers have every right to restrict coverage when the applicant suffers a life-threatening ailment, but the wording of the “good health statement” would prevent people with learning disabilities, ulcers, bronchitis and even varicose veins from applying for insurance, he said.

Mark Chavez, an attorney with the San Francisco consumer rights firm Chavez & Gertler, said the suit should be considered a wake-up call to insurers operating in California and all over the country.

California law specifically prohibits discrimination in the sale of life insurance on the basis of anything other than “sound actuarial principles” or actual and reasonably anticipated loss experience, Wolinsky said.

Other state insurance laws also require insurance rates and coverage denials to be based on statistical evidence regarding the risk of loss, insurance experts said.

However, statistics proving higher mortality rates for disabilities are scanty, Wolinsky said.

Bank of America shares closed down 34 cents at $62.01 on the New York Stock Exchange. Provident is not publicly traded.