Suits Accuse Auto Insurer of Ethnic Bias : Insurance: Hmong claim Farmers discouraged their business by quoting high rates. Company denies the charges.
Farmers Insurance Group has conducted a statewide discrimination campaign against Southeast Asians, discouraging their business by deliberately boosting the prices it quotes them for auto insurance, according to lawsuits filed by consumers and two former Farmers agents.
Farmers denies the charges.
In 1990 or 1991, under pressure to cut losses because of the rate freeze that followed passage of Proposition 103, Farmers began pushing agents to get Southeast Asians--particularly Hmong--off their auto insurance rolls and to keep new ones from buying policies, said former agent William Black, one of the plaintiffs in the three suits filed last week in Los Angeles County Superior Court.
The reason given was that the Hmong were poor drivers, Black said in a telephone interview Monday. The Hmong, a rural people from the mountains of Laos, settled in the Central Valley in great numbers after coming to America as war refugees in the mid-1970s.
Black, who owned a Farmers agency with offices in Fresno and Clovis, said he had a heart attack at age 33 last year, brought on by the stress of lying to Hmong customers who trusted him.
On direct instructions from superiors at his regional office in Merced, Black systematically purged his client lists of Hmong and other Southeast Asians by falsely inflating their estimates of miles driven per year, which caused their premiums to balloon by one-third or more, he said.
“ ‘Get rid of them by any means,’ ” Black said he was told.
For new customers, he said he would manipulate the information they gave him in order to double the proper rate, which normally discouraged them from buying.
Such discrimination is illegal in California.
“I don’t believe we’ve even seen the lawsuits,” Farmers spokesman John Millen said Monday. “In any case,” he added, “Farmers does not discriminate, or we wouldn’t have grown to be the second-largest insurance company in California. We are serving the Asian community, and a perfect example is our record in the Los Angeles riots, where we paid $53 million in claims, much of it to Korean and other Asian business owners.”
Lawyers representing the agents and customers conducted an undercover “sting” operation, which they said proves Farmers agents quote far higher rates to Southeast Asians than to Caucasians seeking identical coverage.
In late August and early September, Hmong posing as customers entered three Farmers agencies in Fresno to get prices. Although they presented clean driving records and otherwise qualified for Farmers’ best rates, all three were offered coverage from Farmers’ Mid-Century Insurance Co. subsidiary, which caters mainly to high-risk, hard-to-insure drivers, said Duane Dorn, a lawyer for the plaintiffs.
When whites seeking virtually identical coverage subsequently applied for insurance at two of the same three agencies, they were offered much cheaper good-driver rates, Dorn said. The prices for six months of coverage at one agency were $957 for the Hmong applicant and $558.10 for the white. Another agency’s prices were $898.10 and $656.30, respectively, he said.
One of the suits is a class action filed on behalf of the customers and seeks punitive damages of $50 million. The two other suits, seeking damages of $10 million each, allege wrongful termination of Black and ex-agent Tou Xiong, a Hmong who worked in a Fresno-area agency.
Complaints were also filed with the state Insurance Department, which is investigating, Dorn said.
Although all the examples cited were from the Central Valley, Dorn said information from the former agents and from Asian community groups led him to believe the bias is statewide.
Black, the former agent, said he and fellow agents would sometimes trade tips at breakfast meetings on “the good-ol’-boy way of getting rid of this problem.” It was important to change computer records directly, “so there was no paper trail,” he said.
Black said he went along because the regional officers threatened to put him out of business otherwise. He said he was a top-performing agent, but acknowledged that his auto line was unprofitable. He quit Farmers in August, 1992, selling his agency back to the company.
“I couldn’t handle it,” he said. “You go home and say one thing to your kids--don’t lie--but you’re doing the same thing at work.”
