Mich. Requires Life Insurers Make Amends for Race-based Underwriting
The Michigan Office of Financial and Insurance Services issued a statement this week saying that a consent order requiring the Western and Southern Life Insurance Company was issued requiring the companies make amends for using race-based underwriting and rating practices.
Insurance Commissioner Linda A. Watters said that she was pleased that Western and Southern Life has agreed to make amends for this unfortunate chapter in their history.
The race-based policies were issued between 1957 and 1970. Investigators found that, unbeknownst to Western and Southern Life, they acquired several companies that had engaged in this practice. As such, these practices were not willful or intentional violations.
According to the OFIS, 76 Michigan policies are affected and remediation has already been granted to affected current policyholders. The amounts of the payouts varied. As an example, if the policy would have paid $1,000 at death it now will pay approximately $1,200 at death. Those with proof of terminated policies have one year to present proof of past policies that were priced higher because of race.
Western and Southern Life Insurance Company will be required to publish the settlement in order to identify any additional policyholders, with the remediation amount capped at $2 million. Any amount not used in connection with individual policies will be donated to one or more educational institutions or charities that serve African-American causes or interests. The company is required to meet and confer with government officials to determine the appropriate distribution.
The company is also required to make an administrative payment to each state participating in the settlement, based upon the number of policies affected in each state. Michigan will receive the minimum payment of $1000.
Watters added that Western and Southern fully cooperated in the investigation, and made its best effort to identify any policies with potentially race-based premiums. She said that is satisfied that this settlement resolves this issue to our satisfaction.
This order is in conjunction with the Ohio Department of Insurance, who was the lead agency in the multi-state case. Illinois, Indiana and North Carolina were also involved in the examinations related to the sale of industrial life and certain other life insurance policies.
In agreeing to the settlement, the company denied any wrongdoing alleged and does not admit or concede actual or potential fault, wrongdoing or liability in this matter.
Source: Michigan Office of Financial and Insurance Services
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