What You Need to Know
- The life insurer involved stopped using race-based rate tables by the 1970s.
- The judge ruled that the plaintiff waited too long to file a suit.
- The judge also ruled that an expert witness's testimony was too general to be used to show that the insurer involved discriminated against African Americans.
A federal judge in Savannah, Georgia, has dismissed a putative class action leveling claims of racial discrimination against an insurance company over its marketing of “industrial life” policies — relatively low value policies that can end up paying less than the accrued premiums.
The complaint accused United Insurance Company of America of targeting Black households for sales of its industrial life policies, described as those that usually have a face value between $1,000 and $5,000, generally intended to cover funeral and other end-life expenses.
The complaint filed in Georgia’s Southern U.S. District Court accused United of “unlawful, unconscionable and racially discriminatory conduct” in relation to the policies, asserting that the named plaintiff’s husband, Chester Barrett, paying monthly premiums of $36 for a policy he bought in 1984 that paid $5,000 upon his death; by then, he’d paid more than $14,600 for the coverage.
But Judge R. Stan Baker said there was no indication that United currently charged Black policyholders any more than it does white ones, nor that it misled the insurance purchasers about the cost or face value of the coverage.
In 2002, he noted, United had settled a discrimination class action over claims that it charged Black customers higher rates than whites.
But, he said, “[a]ccording to United’s in-house counsel, who investigated the allegations in the 2002 class action, United ‘stopped selling policies with race-based rate scales and using race-based underwriting practices by the 1970s.”
Additionally, he said, “neither party disputes that United stopped selling life insurance policies that used a different rate scale for African American customers and Caucasian customers ‘well before Mr. Barrett purchased his policy,’ and they “also agree that United did not have ‘a policy or practice of marketing or underwriting life insurance policies based on the race of its customer[s] at the time that Mr. Barrett purchased his policy.’”
In any case, Baker said, the claims were also barred by the statute of limitations.
While the lawyers for Barrett’s widow, Minerva Barrett, had argued that the statute was tolled by United’s fraudulent actions in marketing the policies, she “has failed to provide any evidence that United committed fraud when it sold Mr. Barrett his policy,” the judge said.
He also discounted the testimony of an expert, Emeritus Professor Robert Klein of Georgia State University’s Department of Risk Management and Insurance, who “states that Mr. Barrett had a type of ‘policy that is heavily market[ed] to low-income [individuals], particularly African Americans’ and that ‘[g]enerally, industrial life policies are directly linked to, and reliant upon racial discrimination.’