NU Online News Service, May 3, 3:51 p.m. – Texas residents will be getting about $4.9 million in settlement benefits and payments from Unitrin Inc., Chicago, according to the Texas Department of Insurance.
The department estimates that 72,800 state residents will share in the national settlement, and that another 14,000 could participate if they meet certain eligibility requirements, the Texas department says.
If the Texas department estimates prove to be accurate, each affected resident will get an average of about $56 in settlement proceeds.
The proposed settlement, announced Thursday, would resolve a class-action lawsuit file in a state court in Alabama. The plaintiffs contend that three life insurance companies owned by Unitrin used race-based policies when underwriting and pricing life insurance policies sold many years ago.
Beneficiaries of the agreement include Hispanics as well as African-Americans.
The three Unitrin subsidiaries affected are Union National Life Insurance Company, Baton Rouge, La.; United Insurance Company of America, Chicago; and Reliable Life Insurance Company, Webster Groves, Mo.
Unitrin has agreed to pay at least $33 million to current and former customers, their beneficiaries and their heirs.
Unitrin also reached a separate agreement with regulators that calls for it to pay $1 million more to consumers and a $1.25 million fine.
In addition to resolving the race-based pricing allegations, the regulatory settlement resolves allegations that the subsidiaries failed to pay some beneficiaries all death benefits due when there were multiple life insurance policies on a single individual.
Texas will get $225,205 of the fine, the Texas department says.
Texas will be getting a higher percentage of the fine than any other state because it has more affected policies than the other states have. About 17% of the affected policies were sold to Texas consumers, according to the Texas department.
The proposed lawsuit settlement still needs court approval.
When class members receive payments will depend on the outcome of a hearing slated for the end of August, according to Lee Jones, a Texas department spokesman.
Texas Insurance Commissioner Jose Montemayor opened the settlement program to Texas residents by signing a consent order.
The order cites allegations that the three Unitrin subsidiaries involved in the proceedings violated Texas insurance laws in connection with the sale of small life insurance policies. The subsidiaries violated the laws by “charging African-Americans and other minority individuals more in premiums or providing fewer benefits than they charged or provided other individuals similarly situated,” the order says.
Federal civil rights legislation enacted years ago prohibits such activity, Jones says. In addition, Texas 11 years ago put an article in the state’s insurance code specifically prohibiting discrimination.
The discrimination described in the Unitrin consent order “isn’t happening again,” Jones says. “This is a practice that went on quite a number of years back. It’s a residue from the past. We know companies aren’t doing it now.”
Although the Unitrin subsidiaries have agreed to abide by the Texas consent order, they continue to deny any allegations of wrongdoing.