Florida regulators discovered racial discrimination during a routine audit of American General Life Insurance.
They found victims in every state, and some of the policies date back almost 20 years. North Carolina's Insurance Commissioner calls the practice inexcusable exploitation.
"This is a very bad thing," N.C. Insurance Commissioner Jim Long says. "You're being overcharged based on the color of your skin."
In an out-of-court settlement, American General Life Insurance has agreed to pay minority and poor policyholders more than $200 million. The Nashville company and its subsidiaries got caught charging excessive premiums to certain groups.
"The companies went on the attitude that African-Americans did not have the same life expectancy of white Americans, so they were basing it on race, which we did not think was legal," Long said.
The settlement gives policyholders a refund of at least $150 or the option of discounted premiums, an increase in insurance value, or lapsed policies can be reinstated.
The American General case is having a ripple effect. Insurance regulators are surveying the rest of the industry for race-based premiums.
Eventually, all the life insurance companies in the U.S. will come under review to make sure they have cleaned up the practice.
North Carolina fined American General close to $400,000. That money will get distributed to North Carolina public schools. The insurance company also donated $2 million to the NAACP.
Monday's settlement involved American General and several of its subsidiaries.
If you own policies with Gulf Life, Home Beneficial, Independent Life and Accident or Victory National Life Insurance Company, you may be involved.
American General has set up a toll free hotline to answer questions. That number is 1-800-681-4944.