N.C. Mutual Life Insurance Co. NCDOI Ink Multi-State Settlement

A settlement has been reached between the North Carolina Department of Insurance and the North Carolina Mutual Life Insurance Company, the nation’s largest minority owned insurer, based in Durham. Insurance Commissioner Jim Long said the company agreed to a multi-state settlement addressing past racially discriminatory practices in the collection of premiums for industrial life insurance.

Under the terms of the agreement, North Carolina Mutual agreed to pay approximately 740 North Carolina and Virginia policyholders who paid excess premiums because of their race. The settlement affects policyholders who held industrial life policies that were in-force, lapsed, surrendered or matured, or who were paid a death benefit, on or after Jan. 1, 1988.

During a market conduct examination of the company NCDOI officials identified two issues: one involving race-based premiums and another involving inconsistent underwriting for policyholders who had the same occupation.

A block of industrial life policies acquired from the North American Life Insurance Company of Richmond, Va., in 1980 were found to be underwritten based on race, color or national or ethnic origin, and this discrimination resulted in non-white policyholders being charged a higher premium than white policyholders.

NCDOI examiners also found a pattern of inconsistent underwriting in policies acquired from North American Life Insurance Company that were issued after 1967, where individuals with the same occupation were charged different rates. Although there was no conclusive evidence discovered by the NCDOI that this particular practice was based on race, the company voluntarily agreed to provide remediation for all affected policies.

Overall, the settlement requires N.C. Mutual to return excess premiums paid or increase policy face amounts or benefits. The average cash benefit or increased policy face amount ranges from $5 to $1,700, while the average policy benefit adjustment is $234.