MetLife agrees to restitution for race-based pricing
The nation’s largest life insurance company is agreeing to settle lawsuits of racial bias in setting life insurance premiums.
MetLife is setting aside $250 million to settle the lawsuits, and pay any fines imposed by states.
"This latest settlement is another step toward eliminating the last vestiges of the ugly and unfair practice of charging more for a small life insurance policy if the customer happened to be an African-American or a Hispanic," Texas Insurance Commissioner Jose Montemayor says.
MetLife worked with the National Association of Insurance Commissioners (NAIC) to settle various race-based premium lawsuits. Montemayor is chairman of NAIC´s Race-Based Premium Working Group.
MetLife is not admitting any wrongdoing, as part of the settlements.
The practice of selling small-value life policies — also known as industrial life insurance or burial insurance — to black policyholders at higher prices than whites, was widespread among insurance companies until the 1970s.
At one time, insurers believed blacks were more likely to die younger and therefore should pay higher premiums. Montemayor says in many cases, minority customers paid far more in premiums than the policies would ever pay.
State regulators have investigated more than 90 U.S. insurers for race-based pricing.
MetLife admits no wrongdoing
"The settlement addresses policies that were issued decades ago amid circumstances that are no longer prevailing today," says Robert Benmosche, chairman and chief executive officer of MetLife. "MetLife prides itself on providing the best products and services to all of our customers. As we examined the limited records available in this case, we determined it to be appropriate with respect to certain policies to make adjustments and payments as provided in the settlement."
"When many other life insurers in the first half of the 20th century refused to sell to African Americans, MetLife sold policies that performed as promised. In fact, regardless of race, policy benefits often significantly exceeded premiums paid over the life of the policy – in many cases, by multiples of two or three," Benmosche said.
"Beginning in 1948, the company equalized the benefits of certain rated policies, bringing them to the same level offered by policies issued with a better risk classification. The proposed settlement extends and expands upon the equalization program that MetLife began in 1948," Benmosche adds.
"We are proud of the wide diversity that exists among our customer base. It is my view that it is in the best interest of our company to put this matter behind us," Benmosche says.
The settlement includes all policyholders and beneficiaries of certain policies that insured non-Caucasians: industrial life policies issued from 1901 through 1964 with face amounts less than $1,000; ordinary policies issued from 1901 through 1972 with less-than-standard risk classifications; and Metropolitan Series policies issued from 1960 through 1972 with face amounts between $4,500 and $5,000.