MAXWELL:  Suffering insurance indignities

10/14/2001 – Printed in the PERSPECTIVE Section of the St Petersburg Times Newspaper


For older African-Americans, the funeral always has been the most important rite of passage. Buying burial insurance, therefore, became essential to black families.

The process began with fear, fear that if you or a relative died, the family could be humiliated by not having money “to put you away nicely,” as the saying goes.

Blacks were not the only ones aware of this fear. Since the early 1900s, greedy corporations and their salesmen exploited this fear by selling bad burial policies to millions of financially unsophisticated African-Americans. The policies gave less coverage at higher cost than the policies sold to whites.

The last of such policies were sold in the early 1980s. Yet, millions of African-Americans still own them. Many do not know the policies are worthless.

Some of the nation’s best-known insurance companies are battling efforts by the aging policyholders for fair compensation. The companies include Metropolitan Life and American National insurance companies. Last year, American General Corp. settled its insurance-bias suits, doling out $215-million in reimbursements to policyholders. But MetLife and the other companies continue to deny wrongdoing. Their denials speak to a stifling corporate arrogance.

Company officials are not talking to the press because of the litigation, but their attorneys are setting the tone. One of the legal arguments MetLife recently offered in an attempt to have lawsuits against the company dismissed is that, given Jim Crow’s influence on most facets of Southern life, blacks must have known their burial policies were inferior. They must have known they were victims of racism. As evidence, MetLife cited some academic papers in the Library of Congress, a few newspaper articles (some 50 years old) and a 1979 segment on 60 Minutes.

Based on my interviews with dozens of people nationwide who hold the policies, few average blacks, if any, knew that the companies had one set of premiums for whites and one for “niggers.”

Karl Thompson, 62, a Maryland resident and a plaintiff in the class-action suit against MetLife, said he does not believe his family knew about the dual books. “Had my parents known about this, MetLife wouldn’t have survived,” he said. “We lived in a middle-income neighborhood, and I’m pretty sure no one knew. The practice was hidden. It wasn’t in our written policy that white people are getting more or their policies are higher valued than the blacks’. They didn’t break it down like that, and, for sure, agents would not inform you.”

Like Thompson, Bradenton resident Mattie Bratcher, 66, said she does not know anyone who knew that white and black policies were different. Bratcher said that manipulative agents abused ordinary people who trusted them. When learning about the deception a few years ago, Bratcher was sickened: “I trusted those people. When you trust a person, you expect them to tell you the truth.”

For the time being, MetLife’s argument that blacks knew about the deception has failed to convince the court. In June, a federal judge in New York ruled that the litigation against MetLife should proceed. He wrote that “the evidence at this early stage suggests that MetLife applied a broad brush to its categorization of African Americans, resulting in the sale of high-cost, low-benefit policies to millions of African Americans.”

Officials for MetLife and the other companies argue that higher charges for blacks used to be justified by higher death rates. While some officials acknowledge that discrimination occurred, they say that such practices have ceased, making further action unnecessary.

“They’re claiming that because these were sins of their fathers, they’re not responsible for fixing them,” said Christa Collins of Tampa’s James, Hoyer, Newcomer & Smiljanich, one of the firms suing the insurance companies. “They continue to enjoy profits, but they continue to distance themselves from the practices.”

Newly surfaced documents clearly suggest the insurance companies had racist schemes. In addition to two rates of premiums, the companies charged selected occupations, such as bootblack or Pullman porter, much more. Salesmen were penalized with smaller commissions if they sold good policies to blacks.

Many of the purchasers were illiterate Southern field hands. Others, though, were middle class who thought they were buying security. “Insurance is supposed to be something,” Thompson said. “It’s what it says. It’s supposed to cover problems or instances like sickness and death. You would have some kind of protection. But we were swindled. When my mother died, we had to pay out of pocket.”

Customers could not determine the quality of their policies by looking at them. The documents were staid, covered with engravings of skyscrapers, with high-tone narrative and reassuring but deceptive words such as “standard” insurance.

In 1947, MetLife began a so-called “equalization” program to adjust policies sold to non-Caucasians, without acknowledging the company was trying to avoid discrimination lawsuits. During the 1970s, several insurers stopped charging premiums on burial policies. Untutored policyholders took the news as a windfall, not as a sign of wrongdoing. MetLife stopped selling burial insurance in 1964, but Monumental and American National held on until 1981.

The unending process of adapting sales strategies to current laws makes Collins and other plaintiffs’ attorneys skeptical of today’s insurance practices. “The companies don’t think the race-based charges were wrong,” Collins said. “What new schemes do they have now?”

Doubtless, holders of burial policies were bamboozled. Over a lifetime, some victims paid the face value of their policies several times over. Burying money in a coffee can would have been a shrewder investment. Unlike owners of regular policies, burial policyholders did not profit from the company’s interest and surpluses, which, over the years, could be huge.

The policies were a risk-free method of increasing company profits. Only whites and a few black doctors and professors _ who were deemed “good risks” _ were permitted to buy the superior “ordinary” insurance. Premiums were collected every quarter or once a year, in contrast to the dehumanizing weekly visits of door-to-door salesmen.

Anyone who thinks burial policies are a thing of the past ignores the lifelong, residual effects of the practice. Many who have held the policies for decades do not have enough coverage to bury themselves. They fear humiliation for themselves and loved ones during the most important rite of passage.

Instead of counting on her old insurance to pay the full amount of her burial, Bratcher worries: “I have to go another route to the grave.”

Another policyholder, who is part of the class-action suit, said: “Some folks are left with enough insurance that would pay for only part of a flower arrangement to go on their caskets.”

As Collins prepares to argue for her clients in court in a few weeks, perhaps some surviving victims of one of the nation’s most racist practices finally will receive a small measure of justice and long-overdue financial compensation.