Allstate, Minority Customers Reach Settlement in Texas Insurance Scoring Lawsuit

TAMPA, Fla., June 2 -- Attorneys representing Allstate's minority customers announced a nationwide settlement today, regarding allegations of racial discrimination in insurance pricing, that was preliminarily approved by a federal judge in Texas today.

"This is a very important settlement," said lead plaintiffs' attorney Christa Collins of the law firm James, Hoyer, Newcomer & Smiljanich PA. "Credit information is used extensively throughout the entire insurance industry. Allstate has agreed to change the way it uses credit information to price insurance. We believe this change significantly benefits Allstate's minority customers."

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 alleged that they were discriminated against in violation of federal civil rights laws, including the Fair Housing Act, by being charged higher premiums based on Allstate's use of credit scoring.

"In addition to changing its credit scoring system, Allstate is implementing other significant programs like an appeals process to help customers whose credit has been adversely impacted by certain extraordinary circumstances like domestic abuse or loss of employment," said attorney Collins.

More specifically Allstate will undertake the following actions under the terms of the settlement agreement:

  * 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.

James, Hoyer, Newcomer & Smiljanich PA is an investigative law firm that represents individuals, organizations and governments. The firm's website is http://www.jameshoyer.com/ .