State Farm Rarely a Neighbor In California’s Poor and Minority Communities, According to Data

State Farm Insurance Company has sued nationally recognized insurance economist Birny Birnbaum, in an effort to cover-up public data regarding its activity in the state’s low-income communities. The package of data — which the California Department of Insurance (CDI) is required to make available to the public by voter-approved Proposition 103 — indicates that State Farm provides much less service in the state’s poor communities than in middle and high income areas.

“For years State Farm has promised to end discriminatory business practices, while, at the same time, fighting every effort to ensure fairness,” said Doug Heller of the non-profit Foundation for Taxpayer and Consumer Rights (FTCR). FTCR was the sponsor of the recently signed “Lifeline” legislation to make low-cost auto insurance available to the state’s low-income motorists. “This data raises the question: How can State Farm be a good neighbor if they won’t even be a neighbor in California’s lower income communities?”

The data that State Farm seeks to keep from the public covers a range of insurance, including auto liability, homeowners, and business insurance. In private passenger auto liability, State Farm, according to the data, has only 48 agents in poor, ethnic minority communities deemed to be “underserved” by the California Department of Insurance. That represents only 2.61% of the 1,840 agents that State Farm employs statewide. Equally troubling, State Farm has claims servicing offices in only three “underserved” communities statewide.

CDI defines an “underserved” community as a ZIP code in which:

a) the proportion of uninsured motorists is ten percentage points above the statewide average; and

b) the per capita income of the community is below the 50th percentile for California; and

c) the community is two-thirds or more minority.

There are 138 such communities statewide, according to the 1997 survey of CDI, the latest available data. According to CDI, 13% of all registered vehicles are in “underserved” communities, but only 6% of all auto insurance was sold in those communities in 1997. State Farm is severely below average, not only in auto insurance availability in poor communities, but in homeowners and business policies as well.

“State Farm has redlined out California’s low-income residents, and they are trying to keep that fact a secret,” said Harvey Rosenfield, President of the non-profit Foundation for Taxpayer and Consumer Rights. “The law requires this to be public information for a reason, and it would be a shame if an out-of-state insurance company could skip over our laws, just as it has skipped over the state’s minority and poor communities.”

After an unsuccessful lawsuit against Birnbaum in his home state of Texas, the Bloomington, Illinois company has filed suit against him in San Francisco Superior Court as part of their effort to squelch the release of this important data.

Proposition 103 requires that all information provided to the Insurance Commissioner, pursuant to Insurance Code 1861.07, be made available to the public. CDI regulations (10 CCR section 2646.6) require insurers to provide the Insurance Commissioner with a “Community Service Statement” which details the number of claims offices, agents and sales offices in each ZIP code throughout the state. The regulation also mandates that companies supply data indicating the “earned exposures” (number of policies) and “total earned premium” broken down by ZIP code. The regulation [section 2646.6 (c)] reiterates that this information is subject to Section 1861.07 and, therefore, a public record.

Data Shows State Farm Continues to Redline Poor, Minority Communities in Los Angeles

Below is a shortened list of the State Farm data for Los Angeles County only. It provides claims office and agent location information for State Farm‘s private passenger automobile liability line of insurance. Los Angeles County accounts for 82 of the State’s 138 “underserved” ZIP codes according to 1997 data. The data shows that:

• State Farm only has two claims offices in L.A.’s underserved communities, while 23 offices are located in middle and upper income communities;
  

• State Farm has only 34 agents (representing only 28 ZIP codes) in underserved communities.
  

• State Farm has placed 507 agents in 164 other Los Angeles communities

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