Ohio Department of Insurance Director Ann Womer Benjamin recently announced that Cincinnati Life Insurance Company has agreed to a multi-state settlement with the Department concerning alleged past discriminatory underwriting practices against approximately 8,000 African-American policyholders from 1947 to 1968 by Inter-Ocean Insurance Company. Inter-Ocean was acquired by Cincinnati Financial Corporation in 1973 and merged into the Cincinnati Life Insurance Company in 1988.
“I am pleased that Cincinnati Life reported the discriminatory practices of Inter-Ocean and has fully cooperated with the Department’s investigation,” Womer Benjamin said. “Proper restitution will be made to policyholders who were wronged by the unacceptable actions of an insurer.”
Under the settlement, which could reach $1.9 million, the company agreed to pay certain African-American policyholders or beneficiaries $75 or the amount they were overcharged for their policies plus interest. Existing policies will be treated as paid in full. The Department also ordered the company to pay an additional $25 to each policyholder or beneficiary. The settlement is expected to be adopted by other state insurance regulators.
Following the Department’s request for information, Cincinnati Life reported that Inter-Ocean might have been engaged in discriminatory marketing practices involving certain life insurance policies known as industrial or burial policies that were sold to African-Americans during the 1940’s until the mid-1960’s.
As a result of the disclosure, the Department conducted an exhaustive review of records provided by the insurer to determine if race was a factor used by Inter-Ocean in underwriting and determining premiums. The Department’s investigation spanned 40-years of records and found that race had been used as a factor.
In a related matter, the Butler County Court of Common Pleas gave preliminary approval to a class action settlement involving Cincinnati Life and the policyholders.
After the court settlement is certified on May 28, Cincinnati Life will mail information outlining the details of the settlement to those affected policyholders and beneficiaries for whom the company still has records. The insurer will also publish notices in various newspapers and establish a toll-free hotline to answer questions. Beneficiaries or policyholders who do not receive notice from Cincinnati Life should contact the insurer with sufficient proof of policy to receive remediation.
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