New York state reaches $10 million settlement with New York Life on race-based underwriting practices
Superintendent of Insurance Gregory V. Serio today announced that New York Life Insurance Company has agreed to a regulatory settlement with the Department concerning past discriminatory underwriting practices against African-American policyholders from 1920 through 1948.
Superintendent Serio said, "The Department is both pleased and gratified that a settlement has been reached to compensate policyholders of New York Life who were in the past treated differently because of their race. As a result of the settlement, an estimated 10,000 former policyholders may be eligible for cash refunds."
Under the settlement, which could reach $10 million, New York Life will pay refunds on endowment policies issued to African-American policyholders between 1920 and 1948 where the policyholder was charged higher premiums due to race. Refunds of the extra premiums will be made with interest.
As a result of the $10 million settlement, an estimated 10,000 former policyholders may be eligible for cash refunds. New York Life will pay refunds on endowment policies issued to African-American policyholders between 1920 and 1948 where the policyholder was charged higher premiums due to race.
New York Life will be engaging in an outreach initiative including mail, print and Internet communication to notify affected parties. For more information on the settlement, please call 1-866-891-0614 or 1-800-420-8141 (TTY).
In June of 2000 the Department announced an investigation into allegations of race-based underwriting of life insurance by its licensees and issued Circular Letter 19 (2000) detailing a reporting procedure. Different premium rates, compensation rates, risk classifications and unequal treatment with regard to dividends, benefits of other policy terms or conditions, based solely on race all evidence race-based underwriting. The Department continues to pursue other investigations involving New York licensees.
In 2002, a federal judge issued a ruling approving a settlement under which MetLife Inc. was to give black customers as much as $160 million in compensation for allegedly charging them higher rates for life insurance than whites.
The settlement ended a class action lawsuit against MetLife in the U.S. District Court charging that the insurer sold small-face-value life insurance policies — known as "industrial" or "burial" insurance policies, which often end up costing more in premiums than the death benefit will pay out — at higher prices, and with fewer benefits, to minorities. MetLife is also accused of actively marketing "substandard" life insurance plans and more expensive payment methods to blacks until 1973.