Investigation and pending nationwide class action lawsuit against GEICO alleging that the company discriminates against African Americans by regularly charging them higher automobile insurance premiums than it charges Caucasians with the same driving records.
The class action complaint alleges that GEICO, the fourth largest private-passenger auto insurer in the United States, with over seven million policyholders, uses occupation and level of education of its policyholders to determine the premiums it charges them. As a result, customers with less education and/or hold occupations that require no more than a high school diploma are considered a greater risk - and thus charged higher premiums - than customers with more education and/or hold occupations that require advanced degrees. GEICO uses these factors in 43 states and the District of Columbia.
Instead of correlating with risk, these factors correlate with race. According to a March 25, 2005 U.S. Census report, 30.6% of Caucasians possess a bachelor's degree or higher, while only 17.6% of Africans Americans/Blacks have such education. Well aware of these differences in average education levels for Caucasians and African American/Blacks, GEICO's use of education and occupation reflects the knowing and purposeful use of race to set its auto insurance rates. Nor did GEICO disclose its use of education level and occupation to the public or to the state insurance commissioners. Instead, they are hidden among the company's underwriting criteria, rather than disclosed among its rate information.
This class action lawsuits asks the Court to declare GEICO's policy and practice discriminatory, and issue an injunction prohibiting the use of occupation and level of education as factors in GEICO's underwriting policies. The plaintiffs are also seeking monetary relief to redress the alleged discrimination.
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