NU Online News Service, Jan. 27, 2004, 4:47 p.m. EST – Cincinnati Life Insurance Company could end up paying as much as $1.9 million to make up for a predecessor company’s past race-based pricing practices.[@@]
The Cincinnati insurer, a unit of Cincinnati Financial Corp., negotiated the settlement with officials at the Ohio Department of Insurance and plaintiffs in a civil lawsuit, Cone vs. Cincinnati Life Insurance Company.
The Ohio department began looking into the matter after Cincinnati Life told the department that Inter-Ocean Insurance Company used race-based mortality tables when pricing small life insurance policies sold door-to-door from the 1940s to the mid-1960s.
Cincinnati Financial, a company that focuses mainly on selling property-casualty insurance, acquired Inter-Ocean in 1973 and merged it with the Cincinnati Life subsidiary in 1988.
The Ohio department has included the terms of the race-based pricing agreement in a consent order, and the Butler County, Ohio, state court that is hearing the Cone suit has given the agreement preliminary approval, Cincinnati Life says.
Cincinnati Life could pay as much as $1.9 million in fines, remediation benefits and policy enhancements if all current and former policyholders come forward, the company says.
All affected policies still in force will be declared fully paid up, with an option to increase either the policy’s death benefit or the cash payment to the policyholder under the settlement, Cincinnati Life says.
Former policyholders and former beneficiaries will be eligible for cash payments.
“Cincinnati Life does not condone any racially discriminatory practices,” Timothy Timmel, a senior vice president at Cincinnati Life, says in a statement.
The company hired its own specialist to study historical policy records, then reported the results to Ohio regulators and cooperated fully with a multistate examination, Timmel says.
“Our shared goal was to determine the right and fair thing to do,” Timmel says. “We’re confident that this settlement resolves issues in the best interests of the policyholders.”