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Press Release Tuesday, July 10, 2001 |
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INSURANCE REDLINING BILL FACES CRITICAL TEST BEFORE
ASSEMBLY INSURANCE COMMITTEE ON WEDNESDAY, JULY 11
Important Consumer Legislation Up Against Intense Insurance Industry Opposition
A bill designed to expand and strengthen existing California regulations used to track insurance redlining will face a critical test on Wednesday July 11, when it goes before the Assembly Insurance Committee for a vote. Redlining is the practice of discriminating against consumers based on their race, income, the ZIP code where they live or other unlawful factors. SB 834 (Escutia) would enact existing California regulations into statute as well as close some data reporting loopholes and create penalties for insurance companies that fail to properly report the data.
The bill enjoys widespread support among consumer and civil rights organizations, including Consumers Union, National Council of La Raza, Southern Christian Leadership Council of Greater Los Angeles, Korean Youth and Community Center, and Family Bridges. But it is facing intense opposition from the insurance industry, which wants to prevent public disclosure and review of insurers' redlining data.
"Despite existing regulations, some insurers fail to file this important redlining data with the state as required and California's largest insurers are objecting to any public examination of their redlining record," said Mark Savage, Managing Attorney at Public Advocates, representing the consumer and civil rights groups supporting the bill. "This bill strengthens this existing reporting requirement and will help the Insurance Commissioner better monitor and enforce the prohibitions against insurance redlining discrimination."
It has been reported that Assemblymember Thomas Calderon, who chairs the Assembly Insurance Committee, is vying to become the next state Insurance Commissioner. Consumer and civil rights organizations supporting SB 834 have called on Calderon to take a leadership role on ending redlining discrimination by moving the bill out of his committee without any weakening changes.
Some insurers have argued that SB 834 should make an insurer's record in underserved communities secret from consumers and the public. However, existing regulations have made the data public since 1994, and the San Francisco Superior Court and Fresno Superior Court have also found more recently that the data must be made available to the public and should not be treated as a trade secret. SB 834 includes a provision from existing regulations that provides that an individual insurer's Community Service Statement shall be made available for inspection by public agencies and individuals.
Since 1994, regulations have required California's insurers to file basic data, by ZIP code, disclosing their presence or absence in California's low-income and minority communities. These data are critical to efforts to end insurance redlining and promote sustained economic development throughout California.
California's low income, minority, and limited-English speaking communities have traditionally been victims of insurance redlining. This discriminatory practice has had dire consequences for economic development in those communities and for California's economic and social well-being as a whole. Over thirty years ago, the President's National Advisory Panel on Insurance concluded that insurance redlining was the primary cause of deterioration of California's inner cities. Again in 1994, the National Association of Insurance Commissioners found that "the primary problem in urban insurance markets is the inadequate availability of insurance products."
The most recent Insurance Commissioner's Report on Underserved Communities found that approximately one seventh or 14.57 percent of California's population lives in underserved ZIP codes. But the average automobile insurer had only 4.41 percent of its offices and 5.76 percent of its agents in underserved communities, and wrote only 6.32 percent of its private passenger automobile liability exposures there. The average homeowners insurer had only 3.83 percent of its agents and 4.35 percent of its offices in underserved communities, and wrote only 6.45 percent of its homeowners exposures there. And the average commercial multiple-peril (non-liability) insurer had only 3.87 percent of its agents and 4.35 percent of its offices in underserved communities, and wrote only 9.77 percent of its exposures there.
"It is essential that California's low income and minority communities have full and equal access to insurance," said Gail Hillebrand, Senior Attorney with Consumers Union's West Coast Regional Office. "If insurers were providing full and equal access to their insurance coverages to the 14 percent of California's population living in underserved communities, then they would have at least 14 percent of their agents, offices, and policies in these ZIP codes."
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Consumers Union, publisher of Consumer Reports magazine, is an independent, nonprofit testing, education, and information organization serving only the consumer. We are a comprehensive source of unbiased advice about products and services, personal finance, health, nutrition, and other consumer concerns. Since 1936, our mission has been to test products, inform the public, and protect consumers.
