$1.23 million paid in North Carolina

RALEIGH - Liberty Life Insurance, a company that last summer reached a multimillion settlement agreement with 24 states after charging its customers different, race-based rates for coverage, now considers the matter closed.
The South Carolina Department of Insurance released a report last month that said the company has paid about $6.22 million to more than 36,000 minority policyholders who were overcharged for burial and other types of insurance.

It is unclear how many people thought to be eligible for the settlement received its other benefit -- a 33.3 percent increase in the value of an existing or unclaimed policy. For example, $333 would be added to the value of a $1,000 policy.

In North Carolina, 8,726 beneficiaries have received about $1.23 million in settlement payments. At least 45,000 policyholders were notified of their eligibility for a policy value increase.

N.C. Department of Insurance officials think that more than 70,000 residents might have been eligible to receive part of the settlement. South Carolina monitored the settlement on behalf of North Carolina and 22 other states because Liberty is based in Greenville, S.C.

Rust Consulting Inc., a Minnesota-based company hired by Liberty, and a third company ensured that notice of the settlement was published in 114 daily, weekly and monthly newspapers, African-American newspapers, and Jet, Ebony and TV Guide magazines. In the Triangle, notices ran in the area's two black newspapers, the Carolinian and Triangle Tribune, and in The News & Observer.

But finding policyholders has not been easy.

Liberty Life was purchased by RBC Insurance and, over time, purchased policies from other companies. As a result, policy records have changed hands many times. Some of the policyholders and their beneficiaries have died or moved. Some of the policies were sold as early as 1905. Others were sold as recently as 1991, according to the settlement agreement.

The settlement process forced Rust to send awkwardly worded letters to policyholders that included phrases such as:

"If the named insured [policyholder] on your policy is African-American or non-Caucasian, the beneficiary of your policy will receive an additional 33.3 percent payment at the time of claim. ... If the named insured on the policy is Caucasian, the regulatory settlement does not apply to your policy and you can disregard this notice."

Not all of the letters reached policyholders or their beneficiaries.

Rust Senior Project Administrator Kristin Dahl said in the report that 3,835 notices to current policyholders were returned without forwarding addresses. The same happened with 6,477 checks to customers whose policies had expired or been used.

Of these, new addresses were found for just 132 of the people who should have received notices and 3,037 of those owed payments.

Bill Free, a spokesman for Liberty Life, said Wednesday that although the official settlement period has expired, the company would continue to consider claims. Eligible current policyholders would receive only an increase in their policy's value.

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Janell Ross, Staff Writer

Staff writer Janell Ross can be reached at 829-4698 or jross@newsobserver.com.

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