|Tuesday, September 21, 1993
Suits Accuse Auto Insurer of Ethnic Bias;
Insurance: Hmong claim Farmers discouraged their business
quoting high rates. Company denies the charges.
By: THOMAS S. MULLIGAN
TIMES STAFF WRITER
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
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
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
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
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."
Descriptors: INSURANCE RATES; AUTOMOBILE INSURANCE;
FARMERS INSURANCE GROUP; RACIAL DISCRIMINATION --
CALIFORNIA; ASIANS -- CALIFORNIA; HMONGS; CLASS ACTION
SUITS; WRONGFUL JOB TERMINATION SUITS
Copyright (c) 1993 Times Mirror Company