Allstate settles minority credit-score litigation

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http://www.dallasnews.com/sharedcontent/dws/news/texassouthwest/stories/DN-allstate_03tex.ART.State.Edition1.3d792b3.html


Allstate Insurance Co. has agreed to revise its use of credit scores in setting premiums for black and Hispanic policyholders under a settlement announced Friday in a federal class action lawsuit that alleged racial discrimination by one of the nation's largest insurers.

The company also agreed to pay up to $150 to each minority driver and homeowner whose score improves under Allstate's revised insurance and credit scoring system. Those customers must opt into the case to be eligible.

In Texas and all other states where Allstate uses credit reports to determine the cost of insurance, minority customers will be allowed to have their policies repriced under the new scoring system – a key part of the settlement signed Friday by U.S. District Judge Fred Biery of the Western District of Texas, San Antonio division.

A group of black and Hispanic plaintiffs filed the original lawsuit in 2001. They alleged Allstate illegally discriminated against them by charging excessive premiums based on their credit scores. Most insurers now use credit histories in deciding who to sell coverage to and how much to charge for auto and home policies.