Insurance Company Racism In The US

A major discrimination scandal is breaking in America over the two-tier pricing policy of insurance companies. So far, US$204 million is to be returned to policy holders. John Howard reports.

For decades, householders answered the door weekly to an insurance man and give him a dollar or less to keep their burial policy up to date.

Most didn't know that if they were black they were giving him more than the whites across town.

It was a practice of discrimination outlawed since the 1960's, but which had endured until April this year.

Giant US insurance company American General, which has insisted that most of its policies had been issued by companies that it had recently acquired, has agreed to distribute US$204 million its policy holders - most of whom are likely to be black and poor.

The company, which was facing a class-action lawsuit, also agreed to contribute to the National Association for the Advancement of Coloured People.

The rationale behind the practice - charging blacks and whites different prices - was that it was calculated by the insurance companies that African-Americans were likely to live shorter lives than whites.

It had continued until now because so many of the policies that remained in circulation dated back decades.

The Reverend Jessie Jackson said he was disgusted with the past practice but pleased with the settlement, "My grandmother had these kinds of policies when I was growing up."

"The insurance man and the rent man would come by every week and when you could only pay one, you paid the insurance man because all the old folks wanted a dignified burial," Reverend Jackson said.

Some people had been paying 90 cents a week for so long that their total outlay had come to almost twice the amount needed to cover the cost of a funeral.

Many did it to make sure their children would not have to carry the burden of burial costs or because they felt their children wouldn't have the money anyway.

"It is tragic this discrimination and exploitation occured in the first place," said Bill Nelson, the insurance commissioner for the state of Florida.

"But it's incomprehensible this practice was allowed to continue up until just a few days ago," he said.

The pricing practices of international insurance companies operating in New Zealand perhaps needs looking at since it is also believed Maori die earlier than other New Zealanders.

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