A Times Editorial

Insurance fairness

Our insurance commissioner's efforts to right the wrongs of charging black customers unfairly shouldn't stop with American General Corp.

© St. Petersburg Times, published June 28, 2000

Florida Insurance Commissioner Bill Nelson has won a significant settlement with a company that took advantage of unsophisticated black customers who were overcharged for policies known as burial insurance.

American General Corp. agreed to repay $206-million in overpayments and $7.5-million in fines in Florida and other states where the practice occurred. Some policy holders will get increased death benefits rather than a refund. One of the largest insurance companies in the nation, American General ended up with millions of burial insurance policies when it acquired other insurance companies.

The contemptible practice worked this way: Insurance agents would sell low-value policies, supposedly to cover the cost of burial, and collect small premiums -- sometimes weekly -- for years. The payments often added up to more than the value of the policy. Worse, the company charged black policy holders 33 percent more than whites for the same amount of insurance, a practice that has been illegal since the 1960s.

Nelson said he became aware of the situation when he saw a TV expose that showed one insurance salesman using a coat hanger to pry money out of a policy holder's piggy bank. Over the past two years, he tried, unsuccessfully, to get the Legislature to pass a law requiring disclosure of such policies' value and total payments.

Last year, he subpoenaed records of American General, which led to the settlement. Four smaller companies selling the insurance in Florida and throughout the South have not cooperated. They are United Insurance Co. of America, Monumental Life Insurance Co., Liberty National Life Insurance Co. and Life Insurance Co. of Georgia.

Nelson should not let up on the pressure until Florida is rid of these illegal, and immoral, practices.

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