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Life insurance provider Unitrin Inc. will pay $27 million to clients overcharged because they were black, according to a settlement reached Thursday in a class action. The money will go to about 467,000 people who held policies sold from the Depression era through 1970. Insurance companies during that time often charged black customers more than whites on the grounds that they were perceived to have a shorter life span and higher insurance risk. “I was amazed and deeply distressed when I found out there were consumers in modern America who were paying higher premiums because of the color of their skin,” said Illinois Director of Insurance Nat Shapo, who served as a lead negotiator in the case. “We’re doing our part to free our society from the unacceptable practice of grouping Americans by race.” Unitrin officials said the settlement will reimburse blacks who unfairly spent more money for the same insurance coverage. The Chicago-based company is the parent of Union National Life Insurance Co., United Insurance Company of America and Reliable Life Insurance Co. “We apologize for the delay in addressing this issue — this is a very fair settlement,” said Tom Evans, a Unitrin attorney. “We’re happy to get this behind us, and we feel it’s the right thing to do.” Unitrin was the third insurer to enter into a nationwide settlement of allegations of race-based life insurance pricing. American General Life and Accident Insurance Co. and Life Insurance Company of Georgia agreed to fines and restitution and settled similar class actions. Attorneys for the plaintiffs in the Unitrin case argued the practice of setting higher premiums for blacks was illegal under the Civil Rights Act of 1966, which prohibited racial discrimination in contracts, employment and other matters. Many of the life insurance policies were sold door-to-door and amounted to a few hundred dollars, said Nan Nases, a spokeswoman for the Illinois insurance department. The policies were mostly used to pay for burials, and customers paid as little as a dime per week. Unitrin also will pay $6 million to policyholders who, because of poor record keeping, never received their life insurance benefits. The company agreed to an additional $1 million nationwide regulatory settlement. The amounts paid will vary because some policies were held longer than others. The settlement was approved Thursday in Bessemer, Ala., by Jefferson County Circuit Judge Dan King. Copyright 2002 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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