On Wednesday morning, black homeowner’s insurance policyholders filed a federal class action lawsuit against State Farm, claiming the multibillion-dollar firm scrutinizes their claims more intensely than those of white customers.
The lawsuit explicitly accuses State Farm of breaking the 1968 Fair Housing Act by making Black policyholders wait longer for their claims to be accepted than their white race State Farm policy holders .
The lawsuit claims that Black race people with homeowners insurance policies were 20% more likely than white customers to require more than three meetings with State Farm representatives in order to settle a claim and 39% more likely than white customers to be asked to submit additional paperwork after filing one The data was collected from 800 white and Black homeowners across the Midwest. The added challenges that Black customers must wait longer to get home repairs authorized.
Aisha Rich of the law firm Fairmark Partners replied, “We take this filing seriously. This suit does not reflect the values we hold at State Farm. State Farm is committed to a diverse and inclusive environment, where all customers and associates are treated with fairness, respect, and dignity. We are dedicated to paying what we owe, promptly and courteously.”
The attorney for the defendants in the class action lawsuit stated, “The data behind this lawsuit indicate that Black homeowners are subject to a fundamentally different and worse claims process at State Farm.” “State Farm should be a ‘good neighbor’ to all its policyholders, regardless of their race.”
Case No.: 22-cv-7014-CLASS ACTION COMPLAINT
Jury Trial Requested
This is a class action brought by Jacqueline Huskey (“Plaintiff”), on behalf of herself and similarly situated homeowners insurance policyholders, against State Farm Fire & Casualty Company (“Defendant” or “State Farm”) under the Fair Housing Act (“FHA”), 42 U.S.C.3601 et seq. Plaintiff seeks remedies for herself and the class for the discriminatory effects of State Farm’s homeowners insurance claim processing policies and practices. Plaintiff alleges and avers as follows:2. State Farm does not treat its Black and white homeowners insurance policyholders equally. A large-scale survey of about 800 white and Black homeowners with State Farm homeowners insurance policies across the Midwest.
State Farms says its AI automated claims processing system is partially to blame for this purportedly discriminating behavior. Modern discrimination can be carried out by computers using racially tinged data sets, unlike racism of the past, due to Black homeowners facing outright redlining by actual people not only computer algorithms.
State Farm even has a patent on the software used that ends up creating bias discrimination. A method of training and using a machine learning model for a METHOD OF CONTROLLING FOR UNDESIRED FACTORS IN MACHINE LEARNING MODELS that controls for consideration of undesired factors which might otherwise be considered by the trained model during its subsequent analyses of new data. Appl . No .: 16 / 720,665 ( 22 ) Filed : Dec. 19 , 2019 For example , the model may be a neural network trained on a set of training images to evaluate an insurance applicant based upon an image or audio data of the insurance applicant as part of an under-writing process to determine an appropriate life or health insurance premium. The model is trained to probabilistically correlate an aspect of the applicant’s appearance with a personal and / or health – related characteristic. Any undesired factors, such as age sex, ethnicity , and / or race , are identified for exclusion . The trained model receives the image ( e.g. , a “ selfie ” ) of the insurance applicant , analyzes the image without considering the identified undesired factors , and suggests the appropriate insurance premium based only on the remaining desired factors.
The lawsuit requests a federal judge to prohibit State Farm from using its present automated claims processing system due to the claimed violation of Black homeowners’ civil rights. In order to ensure that the discriminatory impacts of that system are eliminated, it also asks for audits of the company.
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