An insurance company accused by the Maryland Human Relations Commission of having rates that discriminate against blacks and women has gone to court, contending that its business is none of the commission's business.
The Equitable Life Assurance Society of New York has asked the Baltimore County Circuit Court to enjoin the commission from holding a hearing on the discrimination charges. The company claims that only the Maryland insurance commissioner has jurisdiction over issues involving insurance rates.
The Human Relations Commission began an investigation of Equitable's rates in Maryland in late 1975. The following year it filed the formal charges of discrimination.
The charges were based, in part, on the company's higher rates for disability insurance for women than for men and on the company's refusal to cover workers who earn less than $11,000 a year. Because blacks and women hold a disproportionately large share of low paying jobs, the earnings ceiling discriminates against those groups, the commission contended.
Equitable countered that women have been found to have a higher rate of disability and hospitalization than men and that Social Security provides disability insurance for people who earn less than $11,000 a year.
A hearing on the discrimination charges had been scheduled for earlier this month after a human realtions commission hearing examiner ruled that the civil rights agency did have jurisdiction over the issue. That hearing was stayed, however, to allow the insurance copmpany to make its case against the proceedings in court.
"We were forced into court because The Equitable would be put into a highly competitive position by what the human relations commission wants to do and by its failure to involve other companies," said the company attorney, Joseph Williams.
The commission's general counsel would not comment on whether the commission is investigating other companies' rates in addition to The Equitable's. "I wouldn't comment even to the degree of saying if I know whether there are such cases," said Risselle R. Fleisher. Maryland state law prohibits disclosure of the commission's investigations until they reach the stage of public hearings. Breaches of that confidentiality are considered misdemeanors.
The charges against The Equitable involve other areas of insurance as well, but the main focus is on disability insurance for incividuals, which insures workers' earnings if they are disabled.
If charges against the company were upheld in a hearing, "we would ask that the rates be restructured equitably so as not to discriminate against any race or sex," said Fleisher. She said that what the commission is doing is taking "an affirmative new look at accepted practices."
As The Equitable's rates are now structured, women pay 37 percent higher rates for disability insurance than men, Fleisher said. In addition, all policies exclude benefits for pregnancy.
Under The Equitable's eligibility standards for disability coverage, based on 1970 Maryland census data, only 5 percent of the female work force could qualify, compared to 27.7 percent of the male work force, she said. Under the same standards, based on the same data, only 5 percent of the black work force could qualify compared to 23 percent of the white work force.
The life insurance company also sets premiums based on employment groups to which a person seeking insurance belongs. Broadly, the groupings divide white-collar workers from blue-collar workers.
While The Equitable contends that workers in its higher paying categories are those who have a higher rate of disability and longer periods of recovery from disability, the human relations commission contends that the effect of the groupings is to impose higher insurance premiums for the lower paid workers.
An issue in the proceedings are only policies that cover individuals, rather than group policies.
In 1976, under the pressure of similar charges of discrimination by the American Civil Liberties Union, the New York State Department of insuring surance studied the cost of insuring women against disability.
The study showed that it cost about 40 percent more to provide benefits to women in their 20s than it did to insure man of the same age, and about 120 percent more to insure women in their 30s than men that age. After age 50, the cost of insuring women drops, the study found. When men and women reach their 60s, it becomes slightly less expensive to pay benefits to women than to men, said New York State associate actuary Stephen Riley.