ACLU Challenges Insurance Code : Claims State Law Mandates Discrimination Based on Sex

Contending that California has the only law in the United States that mandates sex-based discrimination in the sale of life insurance, the American Civil Liberties Union filed suit Thursday challenging the statute’s constitutionality.

According to the suit, the rationale for the sex-based differentials called for in the state Insurance Code is that women, as a class, live longer than men, as a class.

“Such group averages are, however, worthless in predicting the life expectancy of any individual man or woman,” the Los Angeles Superior Court suit states.

The action, filed by the ACLU of Southern California and joined by the national ACLU’s Women’s Rights Project, asks the court to annul the code section that calls for sex-based differentials in the sale and contracting of privately obtained life insurance and annuities.

If a man and woman of the same age purchase the identical annuity, her monthly payments would be lower because of the longer life expectancy, but she would also receive a lower monthly payment when she begins collecting annuities, ACLU attorney Carol Soble said.

“No matter how ill or healthy an individual woman may be, it is required (under the law) that she receive a lower monthly annuity payment for her investment dollar than a man of the same age,” the suit contends.

At the same time, the lawsuit points out, the same sex-based differentials discriminate against men who purchase life insurance.

Under California law, “no individual man, regardless of his health, habits or personal history, is permitted to receive as great a return on his life insurance investment dollar as a woman of the same age . . . simply because he is a man and ‘presumed’ to have a shorter life expectancy than she,” the suit states.

In addition, women beneficiaries of policies purchased by men thus “receive less life insurance protection as a class than they would if the rates were equal to the lower rates available to women,” the suit states.

Before Aug. 1, 1983, the mandated sex-based differentials applied to all life insurance and annuities sold and contracted in California. In 1983, the U.S. Supreme Court outlawed the use of sex differentials for life insurance and annuities provided through employment, and the state Legislature amended the code to comply.

However, the Legislature left intact the differentials for those obtaining insurance individually.

On July 2, the California attorney general issued an opinion that the code section violated both state and federal Constitutions. The opinion was provided in response to a request from state Sen. Bill Lockyer (D-Hayward), who had introduced legislation supported by the National Organization for Women and other women’s groups to strike the statute. The bill did not pass.

The lawsuit names Bruce Bunner, commissioner of the state Department of Insurance, as defendant. It was brought as a taxpayer suit in the names of Joyce Fiske, a Los Angeles magazine publisher and past president of the ACLU of Southern California; Jean M. Gates, a legal secretary who lives in Alhambra, and Joseph Lawrence, a Los Angeles public interest lawyer.