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July 29, 1998
The Honorable Jesse Jackson, Jr.
United States House of Representatives
Washington, D.C. 20515
Dear Representative Jackson:
We write to offer our endorsement of the "Anti-Redlining Insurance Disclosure Act of 1998" (H.R. 4145). This legislation represents a critical first step towards addressing the serious problem of unfair discrimination and redlining in the provision of insurance in a simple yet effective way - through the power of sunshine.
Hearings in both the House of Representatives and the Senate over the years as well as numerous studies and lawsuits have shown that residents of low-income, predominantly minority areas have a harder time obtaining adequate insurance coverage. In its report on homeowners insurance released in 1995, the National Association of Insurance Commissioners (NAIC) concluded that "[t]here is considerable evidence that residents of urban communities, particularly residents of low-income and minority neighborhoods, face greater difficulty in obtaining high-quality homeowners insurance through the voluntary market than residents of other areas."
Availability and affordability problems for these communities contributes to and furthers urban decay and disinvestment. The lack of affordable insurance is a material deterrent to homeownership and economic development in low income and minority communities. Without insurance, people simply cannot buy homes. And without high-quality insurance, homeowners in these areas are forced to cover much of their loss out of their own pockets -- losses they had hoped insurance would cover. Without auto insurance, in most places, people cannot drive.
This legislation provides the tools to better understand the extent of the problem and help develop solutions by simply requiring insurers to begin to make public information as to where and at what price they write insurance. The data collected by this legislation will go a long way to shedding light on the debate over insurance redlining and will be a valuable tool for enforcement of civil rights laws at the state and federal level.
The bill calls for the collection and public reporting of data on the cost and type of insurance policies as well as claims made on a census tract basis. There is no doubt that disparities in the cost of insurance between different neighborhoods exist. Only through the collection of relevant data can we conclusively resolve the debate about whether these disparities are due to risk or prejudice. Census tracts provide the kind of demographic data needed to gauge the extent of disparities created by unfair discrimination of minority and low-income neighborhoods. The Home Mortgage Disclosure Act requires banks to report loan information on a census tract basis, and this standard should apply to the insurance industry as well.
We are eager to work with you to obtain passage of the "Anti-Redlining Insurance Disclosure Act of 1998," and commend you for your leadership on this important issue.
Sincerely,
J. Robert Hunter
Consumer Federation of America
Mary Griffin
Consumers Union Washington, DC Office
