DisgRACEd: How Hidden Bias in Insurance Can Affect Your Claim

At Friedman & Associates, we fight for fair settlements on individual claims. But we are also committed to fighting for a fairer insurance system for everyone. One of the most insidious issues in this industry is the legacy and ongoing impact of "redlining"—a discriminatory practice that can quietly influence everything from the premiums you pay to the settlement you receive.

This was the topic of my presentation, "DisgRACEd - A Study on Redlining in Insurance," which I was honored to deliver at the national Win the Storm conference. Here’s what every Georgia policyholder should understand.

What is Redlining? Historically, redlining was the practice of drawing red lines on a map to delineate neighborhoods that were deemed "hazardous" for lending and insurance, often based on their racial and ethnic composition. While officially outlawed decades ago, its legacy persists in more subtle forms.

How Does it Affect Your Claim Today? Modern "redlining" can be data-driven and less overt, but its effects are just as damaging. It can manifest in several ways during the claims process:

• Underwriting at the ZIP Code Level: Insurers use vast amounts of data to assess risk. If your ZIP code is deemed "higher risk"—a designation that can be influenced by old redlining maps and socioeconomic data—you may face higher premiums. This same risk perception can subconsciously influence how your claim is handled.

• Disparities in Adjuster Assignment: An insurer might assign its most experienced, senior adjusters to claims in high-value neighborhoods, while sending less experienced, more rigid adjusters to handle claims in areas they perceive as less valuable. This can lead to less thorough inspections and lower settlement offers.

• Algorithmic Bias: Many insurers now use complex algorithms and AI to estimate claim values. If the data fed into these systems is tainted with historical biases, the outputs can perpetuate those same biases, systematically undervaluing claims in certain communities.
  

Fighting Back Against Systemic Unfairness So what can be done? The first step is awareness. Understanding that these biases can exist is critical. The second step is meticulous documentation. A claim that is built on an irrefutable foundation of evidence, expert reports, and precise line-item estimates is the best defense against any form of bias, conscious or unconscious.

It forces the insurance company to deal with the facts of your specific loss, not with assumptions based on your address. This is the core of our work at Friedman & Associates. We build claims that are so thoroughly and professionally documented that they transcend bias and compel a settlement based purely on the merits of the case.

Our fight is for you, but it is also for a more just and equitable insurance industry. If you feel your claim is being unfairly handled for any reason, contact us.