MetLife to pay up to $.8 million for overcharging minority Missourians

Missouri Gov. Bob Holden recently announced that Metropolitan Life Insurance Co. has agreed to pay as much as $4.8 million to 55,172 Missourians to compensate for charging higher life insurance premiums to some customers solely because they were minorities.

According to an announcement from Holden's office, the MetLife settlement is the latest in a series of "race-based premium" investigations conducted by the Missouri Department of Insurance.

The inquiries began after evidence surfaced that African-Americans and other minorities were paying higher premiums than whites for the same coverage long after court cases concluded that such contracts were illegal. The abuses usually involved small face-value life contracts known as industrial life or "burial" insurance that were sold door-to-door and paid for in weekly or monthly premiums by low-income residents.

"The worst vestiges of racism in this country and in the insurance industry have eased or ended, but our Department of Insurance is vigorously pursuing restitution for these kinds of abuses that took advantage of low-income minority Missourians," Holden said.

Missouri previously joined Illinois, Texas, Louisiana and Florida in heading another multistate settlement that led to Holden's May announcement that Unitrin Inc. agreed to pay $34 million nationwide in similar compensation, including more than $2 million to 35,000 Missourians. Many of the residents involved in that case still were paying higher premiums based on race.

In the MetLife case, the Missouri Department of Insurance joined the New York Department of Insurance. The MetLife case affected minority policyholders in all 50 states and in the District of Columbia, and could provide compensation up to $160 million nationally.

The U.S. District Court for southern New York has given preliminary approval to the settlement, but it still must sign off on the final documents, according to Scott B. Lakin, director of the Missouri Department of Insurance.

"I am pleased with the settlement. This type of discrimination never should have been tolerated," Lakin said.

The MetLife settlement reaches back to policies issued in 1901 and provides full compensation for those who paid more because of race-based pricing and underwriting on an estimated 1.8 million policies. Nationally, about 200,000 policyholders will receive compensation greater than $100.

Involved in the case are industrial-life policies issued from 1901 to 1964 of less than $1,000 in face value; ordinary life policies from 1901 to 1972 for nonstandard risks; and so-called "Metropolitan Series" policies issued from 1960 to 1972 with face values of $4,500 to $5,000.

The settlement fund will donate $5 million to the United Negro College Fund. The insurer will spend $6 million on television, radio and print outreach programming to notify potential beneficiaries.