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Posted in Consumer & Class Action Blog

Auto Insurance – Consideration of Unfair Factors May Result in Discrimination

July 3rd, 2008 by John Campbell

The auto insurance industry is facing an increasing number of lawsuits regarding its pricing of insurance.  According to the National Law Journal, “Insurance companies are being sued for using factors including education, occupation, credit scores and lack of prior coverage to set their prices.” (You can visit the National Law Journal’s online site by clicking here.)  There is clear evidence that many of these policies lead to higher premiums for minorities and the poor.

The aggressive underwriting practices, in which insurance companies attempt to limit their actual risk of paying out on insurance policies by insuring only those people that companies contend pose the lowest risk, have already given rise to settlements.  For example, the Automobile Club of Southern California settled a lawsuit in March for $22.5 million to resolve claims that it added a surcharge because consumers didn’t have prior coverage.  In Texas, in 2007, Allstate paid $12 million to settle claims that using credit scores to set insurance rates resulted in discriminatorily high rates for minorities.

At Simon Passanante we are investigating the practices of insurance companies to evaluate whether or not companies in Missouri and Illinois have used criteria that have discriminated on the basis of race or have caused rates to be higher for the poor than for others.   If you believe you have been a victim of these practices, or if you formerly worked at an insurance company, and witnessed this first hand, we would welcome the opportunity to learn more about this situation by talking with you.

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