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March 31, 2011
TDI Secures Benefits to Settle Race-Based Insurance Claims
AUSTIN - The Texas Department of Insurance has reached a settlement with Texas Imperial Life Insurance Company to secure additional benefits to African-American consumers who were historically sold various types of insurance policies at higher rates than policies sold to whites.
The policies were not sold directly by Texas Imperial but by insurance companies that Texas Imperial subsequently acquired. Although race-based pricing had stopped by 1960 in the sale of new policies, death and surrender benefits for many older policies were never adjusted. The settlement only applies to policies that were in force after December 31, 1995.
"It's not enough to acknowledge that discriminatory pricing was wrong," said Texas Insurance Commissioner Mike Geeslin. "It's incumbent upon us to try and restore the value that should have been in the policy in the first place. We're very pleased to be able to take another significant step in bringing that chapter of the industry's past to a close."
The settlement affects small face amount life insurance policies, commonly known as industrial life or burial policies, which were sold to African-Americans at a higher cost or with lesser benefits than policies sold to white persons. For each person who is identified as a holder of an eligible policy, the company will add 27% to the face amount of in force policies and a like amount to death benefits previously paid. All valid claims under this settlement will be honored for a period of four years.
Race-Based Insurance Policy Webpage
Not all policyholders who are eligible for settlement relief can be identified from the company's records. For this reason, the settlement provides for a claims-made program. Notices will be published in local newspapers and on the TDI website.
TDI's Race-Based Pricing Web Resource Page includes information on current and past settlements, list of insurance companies involved in race-based pricing, and online claim forms and complaint forms. It can be accessed at: www.tdi.texas.gov/consumer/rbsettlement.html