Florida, Georgia Order Insurers To Stop Collecting Premiums.

Insurance regulators in Florida and Georgia said they have filed "cease and desist" orders directing more than two dozen insurance companies to stop collecting higher premiums from blacks based on race.

The two states have the highest concentration among the 50 states of residents who purchased millions of small-value life insurance policies, formally called industrial life and, more commonly, burial insurance, during the 1950s and 1960s. The Florida insurance department said it recently uncovered evidence that many black policyholders were still paying racebased premiums--ranging from 7% to 33% higher than whites--on old policies long after the industry had abandoned such pricing on new sales.

Florida Insurance Commissioner Bill Nelson coordinated the cease-and-desist action with Georgia Commissioner John Oxendine. Nelson's order names 28 insurers, including American General Life & Accident Insurance Co., that hold about 1.2 million burial policies still in force in Florida.

This is the latest volley in Florida's crackdown on alleged discriminatory practices in the life insurance industry. In April, Florida's insurance department told American General to stop collecting higher premiums for burial insurance from African-Americans based solely on race. The department said it found evidence that thousands of these policyholders in Florida are paying more for the same insurance coverage.

American General said it had ceased collecting differential premiums. American General may have as many as 97,500 existing policies in Florida that were sold on a discriminatory basis, according to Nelson.

In June, American General reached a multimillion-dollar settlement with insurance regulators to resolve allegations that it charged African- Americans higher premiums for burial insurance policies. Florida regulators said they had supplied much of the evidence in the case. Under terms of the settlement, American General agreed to reduce premiums, pay cash refunds and increase benefits to 9.1 million policyholders and beneficiaries. The agreement will cost American General $206 million in restitution. The company also said it would pay $7.5 million to regulators in states where it does business.

The National Association of Insurance Commissioners has agreed to use that settlement as a framework for a national settlement that would be used to address race-based pricing practices employed by other insurers. State regulators hake been asked to determine whether other companies engaged in race-based practices that haven't been corrected and to seek a national negotiated settlement with each of the affected insurance companies.

The issue arose last October when the Florida department issued subpoenas to five insurers, seeking records dating back to 1959. In addition to American General, United Insurance Company of America, Monumental Life Insurance Co., Liberty National Life Insurance Co. and Life Insurance Company of Georgia received subpoenas in connection with the department's examination of premium pricing policies.

In addition to those five, 24 other insurers have received Florida's new cease-and-desist order, the department said. The insurers have five days to request an emergency hearing by the department or 30 days to appeal the order in court.