Before reading this article in the St. Paul Pioneer Press, I would have thought that plaintiffs against GEICO would use a disparate impact theory. That is, the facially neutral underwriting criteria has a disparate impact on African-Americans. With the disparate impact theory (under the Civil Rights Act) which does not apply to insurance contracts, the business need only show business necessity for a successful defense. Risk classification, arguably, is a good business necessity reason. However, the plaintiffs seem to be asserting a disparate treatment approach which for racial discrimination is likely illegal under every state’s insurance law. The plaintiffs claim, GEICO
“"knowingly and purposefully used occupation and level of education as proxies for the race of its insured," leading to higher premiums for African-American customers.”
This requires a level of proof that seems to be high. The plaintiffs will need to find a smoking gun where GEICO employees talk about this openly in memos and the like. What seems to be missing is that if an African American had high income and a high status job, he or she would be eligible for GEICO’s lower rates too. Similarly if a white person had low education and low income, that person would get the higher rates, all other things held constant.
One would have to prove that GEICO knew that it was going to “punish “ some majority racial customers just to discriminate against some minorities and that they would set up an underwriting system which benefit some minorities just so that they could discriminate against other minorities. I may be simple, but I think that if GEICO was really trying to discriminate against minorities it wouldn’t set an underwriting rule that allows high income/high education minorities to benefit form the underwriting rule.