State Farm Must Face Race Discrimination Suit Over Algorithms

A pair of Black homeowners defeated a State Farm unit’s effort to dismiss their proposed class action alleging the insurer used racially biased algorithms to handle their claims.

“Plaintiffs plausibly allege a connection between State Farm’s policy and the statistical racial disparities,” said Judge Virginia M. Kendall of the US District Court for the Northern District of Illinois.

But the judge tossed some of the policyholders’ claims alleging Fair Housing Act violations, saying the homeowners failed to show how State Farm Fire & Casualty Co.'s alleged race discrimination caused damage to their property.

AI-generated bias in insurance underwriting and claim-processing ...