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Lawsuit claims American General charged blacks more for burial insurance

American General Life and Accident Insurance Co. has been hit with a potential class action lawsuit that claims it had acquired companies that allegedly charged blacks more than whites for burial insurance policies.

The companies are accused of violating the Civil Rights Act by charging blacks more in premiums than what their policies are worth.

Burial policies — or industrial policies, as they are sometimes called — cover funeral expenses when an insured dies. The policies generally have small face values (less than $1,000).

In a suit filed May 26 in U.S. District Court in Fort Lauderdale, Fla., Gulf Life Insurance Co. and Independent Life and Accident Insurance Co., two companies American General acquired, are accused of charging blacks higher premiums than whites. The complaint does not allege that American General itself sold policies with higher premiums to blacks, but states the insurer continued to collect the higher premiums after it had acquired the companies.

The suit, filed by attorneys Brian McDuffie of the McDuffie Firm and Mark Cullen of the Szymoniak Firm, both of Boca Raton, Fla., seeks national class action status. If the suit is certified as a class action, class members would include any black person who bought a burial policy from one of the companies named in the suit, who paid more in premiums than what the policy is worth, and who was charged more because of their race. McDuffie says that other insurance companies that sold burial policies in Florida also could be included in an amended complaint that he may file at a later date.

In April, the Florida Department of Insurance (DOI) announced the results of an investigation that found American General and a number of companies it had acquired had routinely overcharged blacks for burial policies in the 1950s. The DOI issued a cease and desist order on April 27, ordering American General to stop collecting higher premiums from blacks and to develop a "corrective action" plan that could include refunds of overpaid premiums.

Officials from American General, based in Houston, did not return phone calls from Insure.com seeking comment.

Lots in premiums for few benefits

Channie Patison-Jones of Hollywood, Fla., one of three plaintiffs in the suit, claims that in September 1931 she bought a burial policy with a $90 death benefit from Interstate Life and Accident Co., which was later acquired by Independent Life. She has been paying 25 cents a week for the policy for almost 69 years — an amount that has totaled nearly $900. The suit claims Independent Life charged a higher premium to Patison-Jones because she was black.

Similarly, Willie Dean of Hollywood, Fla., another plaintiff, says he bought a policy in September 1964 from Interstate Life. Since then, he says he has paid $27.19 four times a year for a policy that is worth $2,639, and in total has paid more than $3,600. The suit also alleges that Dean was charged a higher premium because he was black.

Lawsuits abound

This McDuffie-Szymoniak suit is the most recent litigation filed that alleges racial discrimination against blacks in the purchase of burial insurance. In other cases, American General, Atlanta Life Insurance Co., Liberty National Life Insurance Co., Life Insurance Co. of Georgia, Monumental life Insurance Co., Mutual Savings Life Insurance Co., and United Insurance Co. of America have been sued by plaintiffs represented by James, Hoyer, Newcomer, Forizs & Smiljanich of Tampa. The suits, with similar charges, also are seeking class action status.

McDuffie says there are no plans to merge his case with those.

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