Garden City ? When Paul Bergersen told the state agency that regulates insurance firms that his company was treating auto policyholders with Hispanic surnames differently than others, investigators had little experience to draw upon.

Bergersen, who is white and was Shelter Mutual Insurance Co.’s leading salesman in Kansas when he filed his formal complaint in May 2003, told the Kansas Insurance Department that Shelter canceled or failed to renew auto policies after the initial 60-day underwriting period for Hispanics but not for other groups. He also alleged the firm discriminated against minorities in settling claims.

“We are not experts in racial or national origin-type discrimination,” said John Campbell, general counsel for the Kansas Insurance Department and the investigator in the case. “As far as I could tell this was the first time the department ever launched an investigation of racial discrimination.”

The department ruled last year that it could find no systemic discrimination at the company, saying an investigation of that nature was beyond the scope of its examination. The department referred the case to the U.S. Justice Department’s civil rights division, which declined to investigate, saying the matter was outside its jurisdiction.

Bergersen, who was fired a few months after filing his complaint, also alleged Shelter discouraged agents from writing policies for Hispanics and handled those accounts differently.

Shelter, a regional insurer based in Columbia, Mo., with agents in 14 Midwestern states, contended the agent’s claims were “absolutely false” and put the blame for many problem policies on Bergersen.

Shelter’s attorney, Denise Drake, said the company does not ever look at risk groups by race or ethnicity.

“They are in the business to provide insurance; if they are discriminating against any particular group, they wouldn’t be in business very long,” Drake said.

Underserved group

Why would any insurer even want to discriminate against millions of potential customers?

“Hispanics cost more money,” Bergersen said.

Motor vehicle crashes are the leading cause of death for Hispanics ages 1 to 34, the National Highway Transportation Safety Administration said in a 2003 report.

Paul Bergersen looks through records he kept to support his claims that Shelter Mutual Insurance Co. discriminated against Hispanic drivers. Bergersen, a former agent with Shelter, was fired after taking his allegations to Kansas insurance regulators.

The agency cited a medical study showing Hispanics have lower safety belt use rates than non-Hispanic whites. Although Hispanics male teenagers travel fewer miles than their non-Hispanic white counterparts, they are nearly twice as likely to die in a car crash.

Nationwide, Hispanics are the group that’s most underserved by the insurance industry; just 55 percent of Hispanics had auto insurance as of 1997, according to a report by the Center for Hispanic Marketing Communication at Florida State University.

That compares with 86 percent of drivers nationwide who carry auto insurance, according to the Insurance Research Council.

Hispanic drivers with a good driving history usually have no problem getting insurance, said Filipe Korzenny, director of the Center for Hispanic Marketing Communication and author of the Hispanic marketing report.

But newer immigrants – many from countries such as Mexico where auto insurance is not mandatory – find it hard to find affordable insurance without a U.S. driving record. They also often have lower incomes and no credit history, which in turn drives their premiums higher, Korzenny said.

And without valid Social Security numbers or resident alien cards, illegal immigrants may not be able to find auto insurance at any price.

Lawsuit thrown out

When Bergersen targeted Hispanics as a niche market, his sales skyrocketed. He wrote 1,200 applications in 2002, sweeping the company’s sales award ceremony. He wrote an additional 600 policies in 2003 before Shelter fired him.

Less than a month after Bergersen filed his formal complaint with the Kansas Insurance Department, Shelter placed him on probation. He was fired in July 2003.

He filed a whistle-blower lawsuit against Shelter that was thrown out last year without going to trial. The lawsuit alleged Shelter unlawfully retaliated against Bergersen, who has appealed the court’s decision.

U.S. District Judge J. Thomas Marten ruled that too much time had elapsed between his initial contact with regulators and his firing to make a case for retaliatory discharge.

Marten noted that even if the case went to trial, Bergersen would not prevail because of documented problems with his agency before the complaint. Among them were a high loss ratio of 138 percent and delays in responding to underwriting requests.

“You can’t fight a big insurance company with millions of dollars they are willing to throw at you,” Bergersen said. “They will prove you are a dirty dog.”