State Insurance Dept.
A consumer advocate says State Farm is trying to keep him from using information the California Department of Insurance gave him that could show the company has discriminated against poor and minority communities, a practice known as redlining.
In a lawsuit filed Thursday in San Francisco Superior Court, State Farm officials charge that the Department of Insurance "inadvertently" released proprietary information to David Birnbaum, a former associate insurance commissioner in Texas turned private consultant.
According to the suit, California insurance regulators gave Birnbaum trade secrets such as statistical data organized by zip codes, including information on State Farm's premiums, exposures and nonrenewals for different lines of insurance.
"If State Farm's competitors had access to this information, they would be able to capitalize on State Farm's trade secrets developed over many years at great effort and expense and threaten the position State Farm has earned through its own hard work and investment," the documents state.
The suit names Birnbaum, the California Department of Insurance and Insurance Commissioner Chuck Quackenbush as defendants.
The company is scheduled to go to court Tuesday to ask a judge to order Birnbaum to return the data and to prohibit him from discussing it while the case is being decided. In addition, State Farm, the largest auto and homeowner insurance company in the state, wants the names of anyone Birnbaum has given the information to.
Birnbaum maintains that the information he obtained from the state, known as a community service statement, was public record.
"Their competitors already know their strategy," said Birnbaum, who alleges that the company has more than trade secrets to hide.
''In Texas, we found that State Farm was denying policies to poor and minority communities," he said. "And they're afraid that we're going to find the same thing here in California."
More than three years ago, Birnbaum and the Texas Department of Insurance issued a report showing that State Farm had discriminated against poor and minority communities. In 1997, the company sued Birnbaum and the department, saying they had released information that wasn't public.
Birnbaum said he came to California to show a Texas judge that the same information was public here.
Vanessa Wells, an attorney from State Farm, said Birnbaum's redlining allegations are wrong.
"State Farm is (selling policies) in poor and underserved communities," she said.
Officials from the California Department of Insurance declined to comment on the suit.
