Today, we delve into a deeply serious and often overlooked topic – the racist history of insurance in America. From the days of slave ships to discriminatory life insurance practices, this is a journey through a painful past and a call to recognize the inherent value of Black lives.
Slave Ship Insurance: A Dark Beginning
Were slave ships insured? Yes. Human beings, considered "cargo"? Shockingly, yes. Claims could be made to reimburse slave ship owners when lives were lost. The intent behind this policy was to protect the investment of slave owners. Slaves were valuable possessions, and advertisements encouraged insuring them.
Even banks, some of which still exist today, allowed Southerners to use their slaves as collateral for loans. This practice perpetuated a system that profited from the suffering of Black individuals.
Less than 20 years after emancipation, Prudential, one of the largest insurers at the time, announced that policies held by Black adults would be worth only 1/3rd of those held by white policyholders. The cost, however, remained the same. They justified this by citing a higher Black mortality rate, making it incredibly difficult for African Americans to secure life insurance and pass down wealth.
Redlining and Discrimination
Companies redlined African American customers, denying commissions to agents who sold policies to Black individuals. In 1940, over 40% of companies did not accept Black policyholders. It wasn't until the Civil Rights Act of 1964 that discriminatory pricing practices were officially eliminated. However, a lawsuit in 2000 revealed that such policies still existed on the books, charging higher premiums to Black policyholders.
Credit-Based Insurance Scores
Credit-based insurance scores were introduced in the early 1990s, estimating that about 95% of auto insurers use them in states where legally allowed. In 2019, Representative Rashida Tlaib introduced HR 1756, the Preventing Credit Score Discrimination in Auto Insurance Act, which aims to prohibit such discriminatory practices.
A Call for Equality
In 2020, Lloyds of London issued an apology for its role in the slave trade, recognizing the shameful part it played in history.
This brief history reflects how our value was captured and the ongoing fight for equality. We hope it inspires you to do what others did not have the opportunity to do – insure life, get covered, pass down wealth, and challenge the system.
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