United StatesFinance and insurance2023 – ongoingState Farm
Algorithmic claims handling challenged in Huskey litigation
A federal court allowed a discrimination claim over State Farm's algorithmic claims handling to proceed
Problem
State Farm used algorithmic tools in insurance claims handling. Black homeowners alleged that machine-learning fraud assessments led to longer processing and less coverage.
Approach
The homeowners challenged the claims process under the Fair Housing Act. In September 2023, the court dismissed claims under two provisions while allowing a disparate-impact claim under another provision to proceed. The ruling addressed whether the allegations could proceed, without establishing that the algorithms discriminated.
Results
No published figures
Takeaway
The surviving claim concerned claims handling as a service connected with housing. The ruling did not establish the alleged racial effects as facts.
Categories
- Size
- Large enterprise
- Industry
- Finance and insurance
- Business function
- Finance, risk and legal
- Innovation type
- Process innovation
- AI technology
- Predictive analytics and ML
- Adoption
- Vendor solution
- Goal
- Quality and risk
- Evidence
- Regulator, audit or court
Sources
Source summaries
The law firm described the September 2023 decision in Huskey v. State Farm. It distinguished the homeowners' allegations about machine-learning tools from the court's decision to let one statutory claim proceed.
Full details are in the original sources.