[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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