An investigation of the sale of race-based premiums should result in some settlements very soon, according to Texas Commissioner Jose Montemayor.
During the winter meeting of the National Association of Insurance Commissioners here last month, Montemayor said an initial phase of an investigation of the race-based premium working group identified 93 companies that should be examined. The Texas commissioner spearheads the effort to rectify race-based premium practices.
[Since the NAIC meeting, the South Carolina insurance department has taken action against two insurers on this issue. See NU, Dec. 24/31.]
In order to trace violations, which Montemayor said could number in the thousands, records had to be searched as far back as 50 to 70 years.
During a session of the race-based premiums working group, a rundown of the investigation’s progress was discussed. Of the 93 companies examined, 22 companies have had an initial review, 29 have examinations planned or scheduled by one state or a group of states, and 17 have resolved any questions without a financial examination.
Attendees were also told that 13 companies have examinations in progress, nine companies’ exams have been completed but not finalized, two companies’ exams have been finalized and one company has a regulatory hearing pending. The two companies with finalized exams are American General Life Insurance Company, Houston, and Philadelphia United Life Insurance Company, Bala Cynwyd, Pa., attendees were told.
The Texas department is also launching a study of the marketplace for small face amount life insurance. The department is mandated to report findings on or before Jan. 1, 2003 and is targeting October 2002 for completion of the report.
Mike Boerner, a life actuary with the department, said a public meeting later this month will follow internal department work on the project.
The report will evaluate:
–The relationship between the pricing of life insurance policies with small face amounts and the value received by insureds;
–Whether actuarial and expense experience supports the pricing of life insurance policies with small face amounts;