Allstate Settles Texas Insurance Scoring and Discrimination Lawsuit

Allstate Insurance Co. announced it has reached a settlement with the plaintiffs in the case of Jose DeHoyos, et. al. vs. Allstate Insurance Co., et. al., which was preliminarily approved by United States District Judge Fred Biery.

The case, filed in 2001 in U.S. District Court, Western District of Texas San Antonio division, was brought by seven individual Allstate customers seeking to represent a nationwide class of African-American and Hispanic individuals who were issued automobile and/or homeowners insurance policies by Allstate-affiliated companies.

The plaintiffs claim that they were discriminated against in violation of federal civil rights laws, including the Fair Housing Act, by allegedly being charged higher premiums based on Allstate’s use of information from their credit reports. The court has made no rulings on the merits of any of plaintiff’s claims, and Allstate denies that it in any way discriminates against minorities in the pricing of insurance policies.

Allstate said it will take the following actions under the terms of the settlement:

— Allstate will roll-out a new insurance scoring algorithm.
— In states where Allstate uses information from credit reports to rate policies, Allstate will provide its customers with the opportunity to have an insurance policy priced using its new insurance scoring algorithm.
— Allstate will make its new insurance scoring algorithm publicly available.
— Allstate will deliver a comprehensive credit education program to class members, which provides valuable information, including the many different types of business transactions where information from credit reports is used today and how class members can improve their credit position.
— Allstate will adopt an appeals program under which all customers who experience extraordinary events that negatively impact their credit history information can potentially obtain premium reductions.
— Allstate will increase the substantial percentage of its national media spend devoted to targeted multicultural marketing in its continued efforts to make the widest range of consumers aware of its insurance products.
— Class members will be entitled to apply for a one-time monetary payment. Eligibility for this payment will be determined based on a comparison of the insurance scoring group assigned to his or her Allstate policy and the insurance scoring group assigned under the insurance scoring algorithm that will be implemented pursuant to this settlement.

Source: Allstate