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Minority Policyholders Win Settlement From

5/3/2002

Unitrin Settlement Outline


TALLAHASSEE - Florida Treasurer and Insurance Commissioner Tom Gallagher announced today that Illinois-based Unitrin Insurance Group has agreed to a $27 million national settlement for unfair underwriting and pricing practices, including the use of race-based premiums. The premiums paid were for industrial life policies – or burial insurance policies – that cover funeral expenses when the policyholder dies. The settlement also includes $6 million in relief for beneficiaries who never received a death benefit to which they were entitled, for a total settlement of $33 million.

Approximately 26,000 such policies were purchased in Florida, and those policyholders, or their beneficiaries, will share in the settlement. Florida's estimated portion of the settlement is $1.2 million.

The settlement is the result of a national class action lawsuit against Unitrin. Florida, in conjunction with Illinois, Louisiana, Missouri and Texas, was part of a working group that helped negotiate the settlement. Unitrin formerly used actuarial tables showing a shorter life expectancy for African Americans and other minorities, who paid higher premiums as a result. Unitrin and its affiliates, including United Insurance Co. of America, the Reliable Life Insurance Co. and Union National Life Insurance Co., agreed to provide additional or discounted benefits to some minority policyholders and cash settlements to others.

"The company's practices unfairly targeted minority and low-income consumers," Gallagher said. "This kind of discrimination is inexcusable and we are committed to holding life insurance companies responsible for unacceptable pricing practices."

Affected policyholders will be notified by mail of the settlement options available to them, including:

For Racially-Underwritten Insurance Policies:

Class members may choose either an increased death benefit for affected policies that are still in force or a cash refund instead of the increased death benefit. If the policy is kept, Unitrin will reduce the future premiums, if any, that may become due on those policies.

For Beneficiaries:

Beneficiaries or heirs of racially underwritten policies on which a death claim or endowment was paid after 1960 will receive a supplemental cash payment.

For Lapsed Policies:

Persons who owned racially underwritten policies and were paying premiums after 1960, but whose policies have since lapsed or terminated, are also eligible to make a claim for benefits.

The settlement agreement also provides $1.25 million in fines to regulators in participating states, including nearly $60,000 to Florida. The settlement is contingent upon approval from five other states including California, Georgia, Missouri, North Carolina and South Carolina. The settlement is subject to approval by a federal court in Alabama.

Gallagher urged Floridians who believe they are entitled to share in the settlement to call the Department of Insurance toll free at 1-800-342-2762. Policyholders may also contact Unitrin and its subsidiaries at the United Insurance Settlement Administration Center at 1-877-347-4719.