TALLAHASSEE, Fla. (AP) â€” One of the nation's largest insurance companies will pay $206 million to settle a claim that it overcharged millions of mostly poor, black customers because of their race.
American General Life and Accident Insurance Co. was accused of collecting far more money in premiums than the policies were worth.
The Nashville, Tenn.-based insurer will pay an additional $2 million to the National Association for the Advancement of Colored People and $7.5 million in fines to several states under the settlement announced Wednesday.
In Florida, which has the most policy holders and where regulators led the investigation, Insurance Commissioner Bill Nelson said companies owned by American General began discriminatory sales practices against poor, uneducated blacks in the rural South decades ago.
``It's tragic this discrimination and exploitation occurred in the first place,'' said Nelson. ``But it's incomprehensible this practice occurred up until just a few days ago.''
Nelson said the companies owned by American General also charged people premiums long after they had paid far more than a death benefit would actually pay out.
In all, 9.1 million policy holders nationwide will be eligible for some type of relief, depending on the kind of discrimination or fraud they were subjected to.
In the most egregious cases of race-based overcharging, more than 300,000 people will be eligible for increased death benefits, and more than 100,000 of those people will also see premium refunds of at least $150, Nelson said.
Many customers still paying premiums to companies owned by American General will get premium reductions.
Other than Florida, where 184,587 policies for which blacks were overcharged are in effect, the most-affected states are Georgia, where 176,930 such policies are in force, Virginia with 172,302, and Tennessee with just under 80,000 policies.