Michigan Office of Financial and Insurance Services Commissioner Linda A. Watters signed a multi-state Consent Order regarding Monumental Life Insurance Company of Baltimore, concerning its practices of raced-based pricing of their life insurance policies after July 1974.
Under the terms of the agreement, Monumental agreed to return or increase the amount of death benefit by approximately $32 million in adjusted benefits for approximately 600,000 policyholders across the country to ensure that white and non-white policyholders are treated the same. An additional $5 million will be set-aside to provide benefits to those claimants for whom the company no longer has records but who come forward as a result of the advertising campaign. Any monies left over from that fund after a year will be divided among the states.
The Maryland, Pennsylvania and Virginia Insurance Departments conducted the examination over the last two years. As the lead state, the Maryland Insurance Administration (MIA) negotiated a consent agreement with Monumental.
“The acceptance of the Consent Order by Monumental and the subsequent restitution is long overdue and brings to light the ongoing struggle for equality and justice. I am pleased that we have reached this agreement and that the affected policies will be adjusted in this manner,” said Watters. “The Maryland Insurance Administration is to be commended for taking the lead in this review. It is critical that all insurance consumers are treated with fairness and respect – regardless of race.”
Monumental also agreed to fund a four week national advertising campaign notifying potential claimants of the settlement and providing them with information on how to obtain benefits, including the creation of a toll-free telephone number for policyholders to call for specific information about their policies.
An aggregate $2 million payment will be paid to the states that participate in the settlement. That money may be donated to charities for the advancement of minorities if the states choose.
The practice of selling small-value life insurance policies, also known as burial or industrial insurance policies, to African-American policyholders at higher prices than White policyholders was widespread in the insurance industry until the 1970s. The practice continued in some parts of the United States well into the 1990s.
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