Regulators Complete 11 Race-Based Sales Exams

Life of Georgia stopped selling new policies with race-based prices in 1980, but it continued to accept payments on in-force policies originally priced using race-based rates, according to Oxendine.

The company stopped charging higher rates on certain policies in 2000 and discontinued the practice entirely in 2001, Oxendine says.

The number of policies affected is about 3 million, but the number of insureds will be smaller, because many of the policyholders owned several policies with small face amounts, Oxendine says.

The bulk of the policies are tied to the race-based issue but, in some cases, officials are concerned because insureds paid more in premiums than the face amount of the policy, Oxendine says.

Oxendine emphasizes the importance of regulatory efforts to correct past pricing problems, even if the actions that caused the problems were committed years ago.

“It is important to send the message that, if you do something wrong, the piper still must be paid at some time,” he says.

Insurance regulators are also looking into another life consumer protection issue: standards for an insurer that has sold more than one policy to one insured.

Many regulators want to require life insurers to track down all beneficiaries for all policies sold to an insured when the insured dies.

Illinois Insurance Director Nat Shapo says a new draft regulation on the multiple-policy issue will be released in a few weeks.

One possible provision may be an allowance for group life contracts, or other life insurance contracts sold in such a way that an insurance company might not have the names of all of the insureds, Shapo says.

A provision in the current draft–a rule that would require a company to search for a policyholder using any name, or nickname, provided by a claimant for a period of three years before and after the birth date of the insured–will remain in the new draft, Shapo adds.