Discriminatory Auto Insurance Rates Result in Significant Settlement

Case title: Grigson, et al. v. Farmers Group, Inc. (W.D. Tex.)

In 2017, Charles Grigson filed a class action lawsuit against Farmers Insurance Group, Inc. alleging discriminatory rates. The lawsuit was filed on behalf of all Farmers auto insurance customers in the state of Texas who were policyholders in the Farmers Auto 2.0 (FA2) book. This book of insurance was the only one offered in Texas until 2016, when a new book called Farmers Smart Plan Auto (FSPA) was introduced. FSPA offered generally the same coverage as FA2, but at a lower rate. It also was only offered to new Farmers customers.

The new FSPA policies were designed by the company to appeal to a group of customers that Farmers hoped to attract. This lawsuit alleged that Farmers took aggressive measures to make sure that only new customers would be offered FSPA, while FA2 customers were kept in their own existing policies, unaware of the other option. In addition, in December 2015, just before the introduction of FSPA, rates in FA2 were significantly increased. As the two books of business developed, the premium price difference between the two policies could be as much as 20-40%.

Auto Insurance Guidelines

Under the guidelines of the Texas Department of Insurance, rates should be based on actuarial evidence. For example, people who live in different areas may have different rates due to the frequency and cost of accidents in that area. Young people may pay generally higher rates because of their lack of experience as drivers. In this case, however, the customers who held FA2 should have, generally, been a safer “bet” for Farmers. Long-term customers tend to cost companies less over the years. Instead, in this instance, the plaintiffs alleged that these customers were being charged more simply because they were never given the information that they could be paying less for a substantially similar policy.

A Positive Outcome for Our Clients

Slack Davis Sanger partnered with Joe Longley and Lieff Cabraser Heimann and Bernstein to bring suit in the Western District of Texas. The Honorable Judge Lee Yeakel approved the $52 million settlement and commended the extensive mediation process in which both sides engaged. The settlement was administered in such a way that eligible policyholders received relief without having to engage in a lengthy or confusing opt-in process. This settlement was ranked as number two in the Top 10 Settlements in Texas for 2019 by TopVerdict.com.

John R. Davis‘ practice is focused on complex litigation, with an emphasis on consumer fraud, healthcare fraud, antitrust, environmental, and insurance matters. He has spent the majority of his career either working for or litigating cases in the U.S. Federal Courts.

Mike Slack has been practicing law for over 36 years and has litigated hundreds of lawsuits. His experience as a licensed pilot and former NASA aerospace engineer gives him unique insight into aviation accident lawsuits.