Insurers Liable for Bias in Past
State Insurance Commissioner Harry Low warned insurers Friday that they will be held financially accountable for past race discrimination in the sale of life insurance in California and nationwide.
Insurers that charged minorities higher premiums than those paid by whites must make financial amends, Low told a group of consumer and minority activists at a hearing at West Angeles Church of God in Christ.
“Even though the discrimination has ended, that’s not enough,” Low said.
“Those who were victims in the past must be compensated for their financial losses.”
State regulators have identified two California-based companies that may have sold “industrial life” insurance, low-value policies that until well into the 1960s often cost minorities more or offered them lower benefits, Low said.
Low declined to identify the companies but said his department will conduct in-depth reviews this summer to determine whether discrimination occurred.
Regulators nationwide have identified about 100 insurers--mostly in the South and Northeast--that sold the policies and that are believed to have discriminated based on race, California insurance officials said.
Tens of millions of the policies were sold nationwide in the 1940s, 1950s and 1960s, and many Californians moved to the state after purchasing such policies elsewhere, insurance regulators said.
Pastor Cecil “Chip” Murray of First AME Church of Los Angeles said he remembered families in his Florida hometown putting their copies of their policies, along with their premiums, into their mailboxes each week for collection by an insurance agent.
“Every Tuesday, the fathers would put in a quarter, 35 cents, 75 cents,” Murray said. When the men died, the families often found that the benefits were far less than what was promised, he said.
Sponsors of Friday’s hearing--which included the Greenlining Institute, a consumer advocate, and pastors of several Los Angeles churches--called for insurers to agree to a $10-billion global settlement, much like the one crafted last year by German insurers and victims of the Holocaust.
One insurer, American General Life & Accident Insurance Co., agreed to a $206-million settlement last year, but other insurers have denied wrongdoing.
