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June 30, 2004 at 08:00 PM
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New York Life Insurance Company has agreed to refund as much as $10 million to African-American policyholders who it acknowledges were charged higher premiums in the past because of their race.
Under an agreement with New York state regulators, New York Life will pay the refunds to African American owners of endowment policies sold during a period stretching from 1920 to 1948, or to surviving members of their families.
Endowment policies were term life contracts that paid back the premium, plus interest, to policyholders at the end of their terms, ranging from 10 to 20 years. New York Life no longer sells this type of policy.
The New York Insurance Department launched an investigation in June 2000 into charges of race-based underwriting among a number of carriers. MetLife Inc., New York, settled with the department shortly thereafter, promising to refund as much as $160 million for overcharges occurring for policies sold to African Americans in the past.
New York Lifes refunds will cover race-based overcharges, plus interest, according to the Insurance Department.
A spokesman for the company acknowledges that in the early 1900s, its underwriters considered race when evaluating mortality risk.
