When the pipeline ruptured and flooded her home in 2018, Deonne Burgess knew that the cleanup would be messy. What she didn’t expect was a review by her home insurance provider State Farm.
Ms. Burgess said that the state farm’s claims adjuster tried to remove as many items as possible from the repair orders at her home in Inglewood (a predominantly black community in Los Angeles). The mediator believes that state farms do not have to pay to replace doors that are severely damaged by the flood and are no longer closed.
Ms. Burgess, the global payroll director of Wonderful Company, which makes packaged foods such as pomegranate juice and pistachios, began to think that she was black, so she was more suspicious. She told State Farm that policyholders in white communities are unlikely to receive the same treatment.
State Farm spokesman Ross Gadson said Burgess’ claims were “unfounded.” “State Farm is committed to creating a diverse and inclusive environment in which all customers will be treated with fairness, respect and dignity.“
Ms. Burgess was unable to prove that her experience with the State Farm regulator constituted racism. After all, the same insurance company paid a car insurance claim for her BMW 5-series sedan, and the car was also flooded; there was nothing to argue with a group of people to deal with it. However, Mark Young, a vendor hired by State Farm, arranged repairs to her walls and floors, and Leonard Redway, a plumber hired by Ms. Burgess, repaired a broken pipe. He said Ms. Burgess The treatment is worse than that of white customers. . Both of them are black.
Mr. Redway said that in wealthy communities that are predominantly white, it is usually easier for claimants to make insurance companies pay for repairs. He said: “If I were to enter 90210, it would be almost like an open check.” “Sometimes the regulator won’t even come out to check it.”
Allegations of racism are often difficult to prove, but this is especially true in homeowners’ insurance, because insurance companies have a lot of discretion and do not always provide a detailed explanation of why the claim is denied. Since company representatives often use door-to-door visits, face-to-face interactions and other measures to verify claims and assess the credibility of claimants, there is room for deviation.
Although claims disputes are not uncommon in the industry, many black customers say they feel they have been treated unfairly due to race-Jeff Major has witnessed this. The scope of his work.
Major said: “Actually, you can see the difference between a white family and an African-American, Hispanic or Asian family.” “This is well known. It has not been said. This is a culture.”
Tightly grasp the data
Insurance companies strictly control policy sales and claims data. They have long argued that the size and timing of expenditures and the communities that register and process claims are proprietary information, and that sharing this data will harm their competitiveness. They guard it so enthusiastically that most regulators do not have detailed information on how insurance companies evaluate individual claims.
Michael Barry, a spokesperson for the trade group Insurance Information Institute, said the claims data are private because expenditures are considered “losses” and disclosing these data would put insurance companies at a “competitive disadvantage.”
Where data is publicly available (such as car insurance), researchers have found that insurance policies discriminate against black drivers by charging higher premiums to black drivers. But homeowners’ insurance has always been opaque.
Business and economy
It may be difficult to force insurance companies to give up data, partly because they are regulated by the state rather than the federal government. For example, after the Civil Rights Movement, federal law prohibited red envelope transactions with banks, which did not apply to insurance companies. A group of university researchers found that as of 2014, 17 states had no regulations prohibiting insurance companies from discriminating based on race.
In late September, the Federal Insurance Advisory Committee, whose members include executives from the largest insurance company in the United States, voted against a proposal to study racial prejudice in the industry because of concerns that the study would confuse the legal discretion that insurance companies must challenge The difference between the claimant’s proposition and the unfair bias.
Distrust and deposit
In order to assess the authenticity of its customers’ claims, insurance companies send adjusters to meet with claimants face-to-face, giving the company wide discretion in determining the extent of damage and flagging claims for potential fraud.
Tom Baker, a professor at the University of Pennsylvania School of Law, studied insurance payments to victims of Hurricane Andrew in 1992. As a victim, he discovered that Latin American claimants face longer delays than white claimants in collecting funds from insurance companies.
Lisa Thompson, a black homeowner in Toledo, Ohio, had been living with her daughter while the roof of the small house was under repair. . Ms. Thompson filed a claim with the insurance company Allstate.
Ms. Thompson said that a mediator sent by the company accused her of planning the theft. In order to pursue her request, the Allstate representative told her that she must go to the office of a law firm hired by the company for bail. Ms. Thompson spent nearly four hours on December 9, 2019 answering questions about her work experience, family and living time.
Allstate wrote her a letter on June 8 stating that it was still investigating her complaint and required another 180 days to complete the process. Soon thereafter, it cancelled her policy, saying that its investigators determined that Ms. Thompson did not qualify as a “occupant” of her house because she had been with her daughter. But Ms. Thompson discovered that her claim was rejected only when the New York Times contacted Allstate in November to inquire about her case. The insurance company has sent this letter to her to inform her of her denied claim and mailed it to the address where it ruled that Ms. Thompson was unavailable.
The Allstate representative later wrote to the lawyer who was assisting Ms. Thompson with her claim, “We apologize for your client for not receiving this letter.” Her house is still uninhabitable. She is filing a discrimination lawsuit against Allstate with the Ohio Civil Rights Commission.
Allstate spokesperson Nicholas Nottoli said that “based on the facts after thorough investigation,” the claim was rejected. He added that the company has no record of a mediator accusing Ms. Thompson of helping thieves, and that “race is not a factor in pricing, underwriting or claim settlement”.
$11,000 vs. $33,000
Mr. Young is a seller hired by State Farm to arrange repairs to Ms. Burgess’s house. He saw insurance companies treat other black customers in a low-key manner and lobby on their behalf. Although his Los Angeles company Valley Green specializes in repairing damaged houses, he still relies on insurance companies. business.
He fought on behalf of Langston Phillips, who nearly lost his house in a battle with the insurance company Pacific Specialty. Three years ago, Mr. Phillips’ kitchen was flooded after a pipe ruptured, destroying part of his three-bedroom house in Inglewood. A mediator from Pacific Specialty ruled that the company owed Mr. Phillips just over $11,000 for repairs. Phillips’ contractor said his house needed more extensive repairs.
Pacific Professional, please take a look at Mr. Yang. Mr. Young determined that the repair cost would exceed $33,000. A battle ensued and Mr. Young stood with Mr. Phillips, even though he had been hired by Pacific Special Engineering Company.
Due to the dispute, even the payments that Pacific Professionals agreed to pay Phillips gradually reached him, forcing him to move to a hotel room with his two children while waiting for the kitchen to be rebuilt. On a particularly bad day, he sent an e-mail to a professional representative of the Pacific, begging to clarify when some of the money would arrive. “I’m really lost,” he wrote.
Kara Holzwarth, General Counsel of Pacific Specialty, said: “Our goal is to pay the claim as quickly and fairly as possible so that the insured can return to the standard of living before the loss.” “We found that the loss of water leakage may be full of disagreements.” Mr. Phillips’ treatment has nothing to do with his race.
After two years of fighting, Mr. Phillips gave up. Worried about losing his house, he moved back and started working on the weekend to pay for the repair work he was doing (replacement of cabinets, floors and plumbing). “I’m exhausted,” he said.
At the same time, Mr. Yang noticed that most insurance companies are unwilling to cooperate with him. After these companies refused to add him to the list of suppliers, he is now suing 17 insurance companies one by one. He reached a secret settlement in a lawsuit against the traveler and awaits complaints against others.
He said: “I am the only one shaking in the cage. He said why not give any work to minority owners?”
Niraj Chokshi contributed the report.