[Congressional Record Volume 140, Number 27 (Friday, March 11, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]
[Congressional Record: March 11, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]
ANTIREDLINING IN INSURANCE
Mr. FEINGOLD. Mr. President, I am going to speak briefly this
afternoon about a piece of legislation that I introduced yesterday S.
1917, the Anti-Redlining in Insurance Disclosure Act of 1994.
This bill is designed to address the longstanding problem involving
discrimination in the insurance industry which effectively denies
millions of Americans access to affordable or adequate insurance for
their homes and businesses--a practice better known as insurance
redlining.
Historically the term has been associated with certain discriminatory
practices carried out by lending institutions which drew lines on maps
in red ink around communities that they did not want to provide their
respective financial services to--typically home or small business
loans. These redlined areas were generally comprised of neighborhoods
in which large or growing numbers of minority residents lived. For
years similar practices were carried out by some members of the
insurance industry and more recently similar results have been achieved
by more subtle industry practices which leave many residents of poor or
minority communities without access to adequate or affordable property
insurance.
Sadly enough, the decision on who gets insurance and what type of
coverage they will receive based solely on the color of an applicant's
skin or the neighborhood in which that person lives has taken place for
some time now. It is a problem which has been discussed and examined by
public officials as far back as 25 years ago.
The problem of insurance redlining is pervasive and strikes at the
core of the ability of many Americans to participate fully in our
society by being able to enjoy that which has come to be known as the
American dream--home ownership.
The consequences associated with the inability of individuals and
entire neighborhoods to obtain property insurance was probably best
described by the national advisory panel on insurance in riot affected
areas in 1968 when it observed as follows:
Insurance is essential to revitalize our cities. It is a
cornerstone of credit. Without insurance banks and other
financial institutions will not and cannot make loans. New
housing cannot be constructed and existing housing cannot be
repaired.
New businesses cannot be opened and existing businesses
cannot expand, or even survive. Without insurance buildings
are left to deteriorate; services, goods and jobs diminish;
efforts to rebuild our Nation's inner cities cannot move
forward. Communities without insurance are communities
without hope.
This statement was made over 25 years ago and unfortunately, still
accurately reflects the situation in many of our Nation's inner-city
neighborhoods.
Study after study since then including the 1979 report of the
Illinois, Indiana, Michigan, Minnesota, Ohio, and Wisconsin advisory
committees to the U.S. Commission on Civil Rights, ``Insurance
Redlining, Fact Not Fiction'' and the recent study on home insurance in
14 U.S. cities released by the community advocacy group ACORN, have
reaffirmed the extent of this problem and the inadequacy of State and
Federal responses to address it.
These studies and recent reports have also indicated that entire
neighborhoods are continuing to be denied or provided inferior
insurance coverage and that insurance redlining practices are currently
widespread throughout the United States. It is not only disturbing that
discrimination continues to exist today, but it troubles me even more
so that the fine city of Milwaukee, WI has received national attention
regarding this problem. In fact, a CNN television report even stated
that Milwaukee is becoming famous not only for beer, but for insurance
discrimination.
And if you think that the lack of adequate insurance that is
available in many of these neighborhoods is driven solely on sound
principles of economics and statistically based risk assessments--and
not on principles of prejudice--you may be as surprised and outraged as
I was when I first learned of the actions of one district sales manager
of a large insurance company which serves the Milwaukee area community
that were reported in the media and presented in testimony before the
House Subcommittee on Consumer Credit and Insurance. The impact that
prejudice can sometimes have on the decisionmaking process on who
should and who should not be written homeowner policies was evidenced
by the tape recorded advice given to several insurance agents by their
sales manager. This sales manager was recorded saying:
Very honestly, I think you write too many blacks. You gotta
sell good, solid premium paying white people. They own their
homes, the white works. Very honestly, black people will buy
anything that looks good right now, but when it comes to pay
for it next time, you're not going to get your money out of
them. The only way you're going to correct your persistency
is get away from blacks.
This ``quit writing all those blacks'' prejudicial policy was not
only communicated to agents verbally, but was placed in writing as
well. And it has been reported that the manager even showed one agent
how to accomplish this goal by stating that ``if a black wants
insurance, you don't have to say, just tell them, because based on this
kind of policy, the company will only allow me to accept an annual
premium. Do it that way.''
Activity of this type that has prompted such allegations of
discrimination in the insurance industry cannot and must not be
tolerated anywhere in our society. We must now take steps to remedy the
situation so that the actions of a few do not discredit the rest of the
citizens of Milwaukee, our Nation, or the majority of the insurance
industry.
It is an insult to the millions of Americans of color who take pride
in home ownership and make their payments each month for certain
decisionmakers to simply write them off by assuming that minorities are
a greater risk or too risky to insure. Not only does this type of
thinking prevent many hard working individuals of all means the chance
to own a home or start up a business, but it flies in the face of the
evidence and adds to urban decay as well. In fact, data comparing low-
income minority areas with low-income white areas collected from
insurers in St. Louis and Kansas City by the Missouri Insurance
Department showed that low-income minorities on average paid higher
premiums for homeowners insurance than white homeowners of similar
means for comparable coverage, even though losses were lower in the
minority areas. What are the chances for a section of a city to ever
rebound or be revitalized if individuals who are committed to turning
things around are not given a chance and allowed to become insured and
thus enabled to purchase a home or create jobs by opening a small
business?
It is important that we place people of all races and ethnic
backgrounds on a level playing field when it comes to the opportunity
to purchase insurance. It is difficult enough these days for anyone to
be able to afford to buy a home, and is even more difficult, if not
impossible, to purchase one without homeowner insurance. Expanding home
ownership is critical to any effort our Nation undertakes to turn
around our cities. We must remove all barriers such as this type of
discrimination in order to fulfill any urban revitalization goals.
The Anti-Redlining in Insurance Disclosure Act of 1994 would, among
other things, give Federal agencies and affected individuals the
ability to detect and address effectively the problem of insurance
redlining and enforce the antidiscrimination provisions of the Fair
Housing Act.
The disclosure requirements found in this bill are patterned after
those found in the Home Mortgage Disclosure Act [HMDA] which require
financial institutions to report their lending activities along census
tract lines. The only burden faced by insurance companies that are in
compliance with the Fair Housing Act law that will be imposed by these
requirements will be the costs associated with the collection and
reporting of the data. Banks, savings associations, and credit unions
have been able to meet the similar requirements under HMDA by using in-
house software programs and outside services to convert address
information to census tract form. The bill takes these costs concerns
into account by requiring the Secretary of HUD to make software to make
such conversions available to insurers at cost.
After three decades of research, it is time that our Nation take
concrete steps to end discrimination in the insurance industry. The
Nation was first made aware of insurance redlining practices after
studies following the riots of the 1960's and the problem has reemerged
as a national concern primarily because of the aftermath of the 1991
Los Angeles riots. It is unfortunate that such tragedies must occur in
order for the Nation to take notice of the problem and look for
solutions. And it is a shame that three decades of research showing
that there is an insurance crisis in many of our Nation's communities
has gone unheeded.
Especially in light of the fact that in this same period of time we
have required banks, and other lending institutions to provide housing-
related credit in a nondiscriminatory fashion by enacting the Fair
Housing Act of 1968, the Equal Credit Opportunity Act of 1975, and the
disclosure requirements found in the Home Mortgage Disclosure Act, and
even require that lenders have an affirmative obligation to lend in all
the communities they are chartered to serve, including low and
moderate-income neighborhoods through the Community Reinvestment Act of
1977.
Our experience with the Home Mortgage Disclosure Act has shown that
the public disclosure of this type of information can serve multiple
purposes in combating insurance discrimination by allowing for an
accurate assessment of the extent and nature of the problem; and by
assisting affected individuals and State and Federal regulators in the
enforcement of antidiscrimination laws. Such disclosure can also
stimulate self corrective policies by the industry itself by bringing
to light the disparate impact of certain industry policies.
Unfortunately, we can pass all of the laws that we want in order to
make discriminatory activities illegal--but none will ensure that such
practices will go away. Unequal treatment of individuals solely on the
basis of the color of their skin will not disappear because a law is
enacted making it illegal. But the law does enable people whose rights
are violated to seek redress and punish those who violate these rights
through the legal system. And the law also symbolizes our consensus to
condemn and eliminate this invidious disrimination. The antiredlining
in the Insurance Disclosure Act of 1994 will help achieve both of these
purposes.
I am also interested in exploring suggestions that have been made
that the insurance industry ought to be subjected to the same
requirements that are imposed upon the banking industry under the
Community Reinvestment Act. Just as the banking community is required
to address the credit needs of all communities, we should consider
whether the insurance industry ought to be asked to make a similar
effort to make affordable insurance accessible to the residents of
those communities as well.
Finally, I would also like to thank key Members of the other body,
Representatives Joseph Kennedy and Cardiss Collins, for bringing the
issue of insurance redlining to the attention of Congress. Through
their respective subcommittees, information has been gathered that
documents the problems of insurance redlining and its consequences for
millions of Americans, who are denied insurance or forced to pay higher
premiums for lower coverage. My colleague from Wisconsin,
Representative Tom Barrett, has also been deeply involved in this issue
and chaired a hearing in Milwaukee on January 4, which focused on these
problems. Representative Barrett was actively involved in efforts to
combat discrimination when we both served in the Wisconsin Legislature
and I am pleased to have the opportunity to work with him again on
these important issues.
The bill I have introduced today is modeled after H.R. 1257, as it
was reported out of the House Banking Committee, since it requires the
disclosure of data along more well defined census tract lines rather
than by ZIP Code. This method follows the requirements made by the Home
Mortgage Disclosure Act and provides for the reporting of data that is
more useful for disclosing patterns of discrimination, since many urban
ZIP Codes contain neighborhoods that have a diverse range of economic,
racial, and housing stock characteristics.
As I noted yesterday, the administration has signaled its support for
legislation which would address the problem of insurance redlining and
there are a number of community organizations supporting this bill as
well, including:
The Alliance to End Childhood Lead Poisoning.
The American Planning Association.
The Association of Community Organizations for Reform Now [ACORN].
The Center for Community Change.
The Consumer Federation of America.
Consumers Union.
The National Council of La Raza.
The National Fair Housing Alliance.
The National Insurance Consumer Organization.
The National League of Cities.
The National Low Income Housing Coalition.
The National Neighborhood Coalition.
Network: a National Catholic Social Justice Lobby.
Public Citizen's Congress Watch, and
The United Methodist Church, General Board of Church and Society.
I look forward to working with all of my colleagues and the
administration in making sure that we do all that we can to end the
practice of insurance discrimination.
Mr. MITCHELL. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER (Mr. Mathews). Without objection, it is so
ordered.
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