A federal court in New Orleans will soon hear the case of agroup of Allstate and State Farm policyholders who claim they wereunfairly discriminated against by the insurers' use of their credithistory to rate them.

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Earlier this month, the seven-member Louisiana Insurance RatingCommission, which rules on carriers' rate requests, said it hadfound no evidence that State Farm and Allstate's use ofcredit-based insurance scores had unfairly discriminated againstauto and homeowner policyholders.

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Policyholders had argued that the two insurers' use of creditinformation to compile insurance scores resulted in discriminationagainst minorities and low-income customers and resulted in policycancellations, nonrenewals or higher rates.

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The LIRC said that it had conducted proper investigations beforeapproving the two companies' rate filings and was not required tolook into the policyholders' contention they are based ondiscriminatory credit scores.

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New Orleans-based attorney Tom Thornhill, who represents thepolicyholders, called the IRC hearing a "kangaroo court" and saidhe plans on filing suit in state court next week charging the LIRCwith failing to perform its duties properly.

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The case began as a state action more than a year ago and hadthe LIRC as a party to the suit. State Farm and Allstate securedits removal to federal court.

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"You should not place too much stock in the merits of thedecision of the LIRC to find that it had no duty to investigate thediscriminatory effects of credit scoring in fixing rates or thepremiums charged," Mr. Thornhill said. "We did not expect the LIRCto admit it had failed to do its job."

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Mr. Thornhill said the federal case now includes claims underU.S. law. "That makes this a potential national class action," hesaid.

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Commission Chairman Chad Brown said that states that banned useof credit-based insurance scores found themselves embroiled in afederal lawsuit. Louisiana has addressed the issue through statelaw and has a number of safeguards that protect consumers, hesaid.

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