|
|
PUBLIC ADVOCATES, Inc.|
Press
Release |
Contact:, |
SAN FRANCISCO COURT RULES THAT
STATE FARM CAN'T HIDE
INSURANCE REDLINING DATA FROM PUBLIC
Data Will Help Determine Whether
Insurer Discriminates Against Consumers
San Francisco, CA -- San Francisco Superior
Court Judge Ronald Quidachay rejected a lawsuit today filed by State
Farm aimed at preventing the California Department of Insurance from
releasing the company's redlining documents to the public. Redlining
is the practice of discriminating against consumers based on their
race, income, the zip code where they live or other unlawful factors.
State Farm filed its suit last year claiming that the redlining
documents contain "trade secrets" and that the Insurance Department
has no authority to disclose them to the public without the insurer's
consent.
"Insurance redlining is no trade secret in
minority, low-income communities across California," said Rev. Norman
Johnson, Interim Executive Director of the Southern Christian
Leadership Conference (SCLC) of Greater Los Angeles. "The Court's
ruling today upholds the anti-redlining regulations and the need for
full public disclosure of data that will determine whether insurance
companies are discriminating against underserved communities." The
SCLC and Consumers Union, represented by the civil-rights law firm
Public Advocates, requested State Farm's redlining data and
intervened in the lawsuit to protect the public's right to know.
"State Farm, Farmers, Allstate, and other major
insurers have been hiding behind the ridiculous argument that
redlining data is a trade secret," said Mark Savage, Managing
Attorney of Public Advocates and lead counsel for the Intervenors.
"To my knowledge, today's ruling was the first in the nation to
conclusively decide that such redlining data should be public. The
law makes these redlining filings public, not secret, so that the
Insurance Commissioner, government leaders, and the public can
enforce the laws against discrimination and promote equal economic
opportunity in low-income and minority communities."
State Farm's lawsuit began in December 1999
when it sued Insurance Commissioner Chuck Quackenbush and consumer
advocate Birny Birnbaum after Birnbaum received the redlining data
from the California Department of Insurance and confronted State Farm
with the data in litigation in Texas. State Farm's suit sought in
San Francisco Superior Court to force Birnbaum to return the data to
the Insurance Commissioner and to block Quackenbush from giving it to
any other member of the public. Subsequently, the Court dismissed
all of State Farm's claims against Birnbaum.
Since 1995, companies that sell auto, homeowners, or small business commercial insurance have been required to file redlining data with the Department. The data includes race and gender of policyholders, as well as the number of policies sold and cancelled and location of offices and agents, all sorted by ZIP code. Under current law, the Department must issue an annual report summarizing the data filed for the previous calendar year. The reports summarize each insurer's record in all underserved ZIP codes combined, which makes it difficult to pinpoint where individual companies may be engaged in redlining. But even these summaries show great disparities between the rate at which insurance companies write policies in minority and low income communities versus the rate at which policies are written elsewhere in the state.
For example, in 1995 approximately one sixth
(16.16%) of California's population lived in underserved communities,
but State Farm's data revealed that State Farm had only 2.59% of its
agents in underserved communities combined. While 16.16% of
California's population lived in underserved ZIP codes, the average
insurer wrote only 5.57% of its private passenger automobile
liability policies, 6.62% of its homeowners policies, and 9.55% of
its commercial multi-peril (non-liability) policies in these
low-income, minority ZIP codes. State Farm's record was even worse,
with only 4.31% of its private passenger automobile liability
policies, 5.19% of its homeowners policies, and 9.13% of its
commercial multi-peril (non-liability) policies in these low-income,
minority ZIP codes combined.
State Farm's lawsuit sought to keep secret
whether these percentages fall even further in certain low-income,
minority ZIP codes such as inner-city Oakland, inner-city Los
Angeles, and redlined communities in the Central Valley.
"We are pleased that the court has upheld the
public's right to know," said Gail Hillebrand, Senior Staff Attorney
with the West Coast Regional Office of Consumers Union. "We hope
today's decision will prompt the disclosure of redlining data for all
companies so that we can identify which insurers may be violating the
law."
