New York Life Insurance Company has agreed to pay up to $10 million in cash refunds to African-American policyholders who were charged higher-than-standard premiums from 1920 to 1948.[@@]
Under an agreement with New York state regulators, New York Life will pay the refunds to owners of endowment policies. The company acknowledges that those customers were charged higher premiums than other customers because of their race. Endowment policies, which are no longer issued, were term life contracts that paid back premiums, plus interest, to policyholders at the end of their terms, which ranged from 10 years to 20 years.
The New York State Insurance Department began investigating allegations of race-based underwriting at several carriers in June 2000. MetLife Inc., New York, settled with the department shortly thereafter and promised to refund as much as $160 million.
New York Life's refunds will cover race-based overcharges plus interest, according to the New York department.
A spokesman for the company acknowledges that in the early 1900s its underwriters considered race when evaluating mortality risk.
