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The Ohio attorney general’s office announced a $4.3 million settlement of redlining litigation brought against Farmers Insurance, the latest in a series of settlements reached in Ohio with insurance companies alleged to have discriminated against the owners of older homes in poor neighborhoods. Under the terms of the consent decree approved by Lucas County, Ohio, Court of Common Pleas Judge William J. Skow, Farmers admits no wrongdoing but will pay $1.3 million in damages and provide an additional $3 million in grants and loans for housing programs in low-income minority communities. Ohio Civil Rights Commission v. Farmers Insurance of Columbus Inc., No. CI-0200002981 (Lucas Co., Ohio, Ct. C.P.). Assistant Attorney General Stephanie Bostos Demers, who, along with Assistant A.G. Marilyn Tobocman represented the plaintiffs, said the crux of the case is the “disparate impact” that Farmers’ criteria for selling replacement-cost policies had in predominately minority neighborhoods. Andrew Sandler of New York’s Skadden, Arps, Slate, Meagher & Flom represented Farmers. He said the company had already rewritten its guidelines prior to reaching settlement. The case that Farmers settled originated in complaints brought to the U.S. Department of Housing and Urban Development by the Toledo Fair Housing Center and two Toledo homeowners, Justina Alsup and Monica Holiday-Goodman, who were denied replacement-cost homeowner policies because their homes did not meet Farmers’ criteria. Stephen M. Dane of Toledo, Ohio’s Cooper & Walinski represented the Toledo Fair Housing Center. Farmers underwriting guidelines sold replacement-cost policies based on a formula that took account of the age of the home and the cost of replacement in proportion to the market value. Incorporated in the complaint was an analysis of the housing stock in predominantly minority census tracts throughout Ohio cities that found 90 percent of the houses were ineligible for replacement-cost policies on age criteria alone, Demers said. “We are not saying Farmers has a duty to provide replacement-cost policies but they do have to make the choice available,” she said. Ohio has reached settlements similar to the Farmers case with State Farm, Nationwide, Allstate, Liberty Mutual and Travelers. “In an earlier time, the entire industry used guidelines, all of which were approved by state insurance commissions that were alleged to have a disparate impact on African-Americans. Those guidelines are now being rewritten,” Sandler said. Lisa Rice, executive director of the Toledo Fair Housing Center, said, “Farmers has now joined a long list of insurers doing business in Ohio that are making important changes in their product offerings and underwriting guidelines.” Under the consent decree, Farmers will pay $1.3 million in damages; provide an additional $1 million to the Northwest Ohio Development Agency for home improvement grants to low-income homeowners; and provide another $2 million for low-interest loans.

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