main menu page title feature menus content footer
My Florida C F O

CFO's Initiatives

Stay Connected

Follow the
Department of
Financial Services

Sign up for the CFO's
weekly newsletter!

Press Release

News   RSS RSS   Press Office   Archive

Minority Policyholders to Get Relief under $50 Million Settlement with Life of Georgia and Southland Life

6/4/2002

FAQ
http://www.fldfs.com/Consumers/Alerts/press/2002/LifeofGeorgiaFAQs.pdf>

TALLAHASSEE - Florida Treasurer and Insurance Commissioner Tom Gallagher announced today that nearly 430,000 minority policyholders in Florida will share in an estimated $50 million settlement with two insurance companies for unfair underwriting and pricing practices, including the use of race-based premiums. The premiums paid were for industrial policies - or burial policies - that cover funeral expenses when the insured dies.

"This kind of discrimination is inexcusable and should not have occurred," Gallagher said. "The relief is a long time in coming."

The settlement follows a market conduct examination initiated by the State of Georgia, in conjunction with the State of Florida and eight other states, on behalf of affected policyholders. The examination began in November 2000 after it was learned that the companies had historically charged African-Americans higher premiums than white customers for similar or identical coverage.

The examination resulted in a nationwide class action lawsuit against Life Insurance Company of Georgia and Southland Life Insurance Company. The companies have agreed to provide $50 million in compensation to 2.5 million policyholders across the country and $4 million in fines to state insurance commissioners in several southern states, including Florida. Florida's portion of the fines is expected to be nearly $688,000.

Under the settlement, affected policyholders, or their beneficiaries, can choose either to increase their death benefits to the level received by whites for the same premium or receive the difference in cash. The settlement covers non-white policyholders who purchased "substandard" Industrial Life or President's Thrift Series policies sold by Life Insurance Company of Georgia, holders of "substandard" policies from companies acquired by Southland and holders of policies sold by Life Insurance Company of Georgia in which premiums paid exceed the death benefits.

Gallagher said that affected policyholders can choose either to increase their death benefits to the level received by whites for the same premiums or to receive the difference in cash.

Industrial life policies were a popular insurance product in the 1960s, typically sold door to door in low-income neighborhoods. Policyholders paid weekly premiums. It was common practice to charge African Americans higher premiums than whites.

The settlement requires Life Insurance Company of Georgia and Southland Life to attempt to contact affected policyholders or their beneficiaries about the terms of the settlement and what actions, if any, the consumer must take to participate in the settlement. Life Insurance Company of Georgia has set up a toll-free number - 877-477-0960 - to answer questions about the settlement. Consumers may also contact the Florida Department of Insurance toll-free at 800-342-2762 for further information.