State Farm Agents, Clients Claim Anti-Black Bias

State Farm is facing a wave of racial discrimination claims from employees and clients who say the nation’s largest home and auto carrier denied claims from Black homeowners on false fraud allegations and treated Black agents and employees unfairly.

Two cases were spotlighted by The New York Times last week in an article “Where State Farm Sees ‘a Lot of Fraud,’ Black Customers See Discrimination,” which focused on a Black landlord in a Black neighborhood who was denied a claim for damages due to a water pipe break.

State Farm denied the landlord’s claim because of what it said was a history of fraud in the area, according to the article’s allegation. The landlord has since sold all of his properties and is working as a security guard.

Carla Campbell-Jackson, a former State Farm employee who was already suing the company, came to the landlord’s defense, saying that the carrier had a system of limiting losses by categorizing many claims as fraud in Black areas. The Equal Employment Opportunity Commission last year agreed that Campbell-Jackson had grounds to sue State Farm, where she worked as a claims section manager in Michigan. The company fired her for releasing company information, which Campbell-Jackson denied, according to the claim.

'We Fully Deny'

State Farm released a statement saying it is an inclusive company and will defend itself in court:

“While we will not attempt to litigate these issues in the media, we fully deny the allegations being made by plaintiffs and will vigorously defend ourselves in court. At State Farm we believe in fostering an inclusive environment where everyone feels respected and valued. We’ll continue to engage in open, honest dialogue to find actionable and meaningful ways to continue advancing diversity and inclusion at State Farm and in neighborhoods and communities."

The statement went on to point out State Farm's diversity and inclusion efforts.

An attorney representing Campbell-Jackson told The New York Times that he was also representing more than 150 current and former State Farm employees of color ready to bring their own cases against the carrier.

A lawsuit was filed last month in Illinois against the carrier on behalf of Shashi Mandhyan, whose attorney said an Illinois Department of Human Rights investigation concluded Mandhyan was “retaliated against and harassed by State Farm, received negative performance evaluations, and was ultimately terminated.”

Black Agents File Class Action

A group of seven Black former agents are part of a class action filed in State Farm’s home state of Illinois in 2020, alleging the carrier treated them unfairly and assigned them to less lucrative areas and did not have Black agents take over existing books of business.

“State Farm’s discriminatory policies and practices steer African Americans to less lucrative agencies and territories; deny them valuable business opportunities and resources; subject them to heightened scrutiny and differential discipline; and result in lower pay than Agents who are not African Americans,” according to the complaint from Alton Williams, Brandon Herndon, Markus Tolson, Jeffrey Flowers, Brooke Cluse, Vvonaka Richardson and Vera Dixon.

The suit alleges that State Farm:

• Gives non-African Americans a head start by allowing them to take over existing businesses, while Black agents are “race-matched” to less affluent areas where they have to build a business from scratch. The suit also alleges that the less affluent prospects buy lower value products and are less likely to pay their bills on time, requiring the agents to hire staff to collect.

• Disproportionately allows non-African American agents to expand into other areas while limiting Black agents.

• Assigns the most lucrative business opportunities to agents who are not Black, and gives African American agents less lucrative business opportunities. For example, when existing policies need to be reassigned when an agent moves on, the better ones go to non-Black agents. “When State Farm does assign insurance policies to African American Agents, they are generally fewer in number, more problematic, and less lucrative than those that State Farm assigns to non-African American Agents,” according to the suit.

• Gives lower bonuses to Black agents because they are assigned to less affluent areas. “State Farm intentionally selects and relies on factors that disadvantage African Americans to calculate eligibility for and the amount of the Scorecard Bonus paid to agents,” according to the suit, referring to the carrier’s bonus system.

• Targets Black agents for compliance issues, by subjecting them to heightened scrutiny and imposing greater discipline than it does on non-African American agents, whose violations are routinely ignored or are subject to less severe discipline.

The suit alleges that because Black agents were unfairly disciplined, they were ineligible to offer certain financial products, which limits compensation, making them ineligible to open another agency or other policy assignments. The suit is still pending.

Steven A. Morelli is a contributing editor for InsuranceNewsNet. He has more than 25 years of experience as a reporter and editor for newspapers and magazines. He was also vice president of communications for an insurance agents’ association. Steve can be reached at [email protected].

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Steven A. Morelli is a contributing editor for InsuranceNewsNet. He has more than 25 years of experience as a reporter and editor for newspapers and magazines. He was also vice president of communications for an insurance agents’ association. Steve can be reached at [email protected].