By Keith Henderson, writer of The Christian Science Monitor
The Christian Science Monitor
BANKS have been intensely scrutinized by regulators, civil rights groups, and community organizations concerned about redlining - the denial of mortgages and other services to people in areas considered deteriorating or risky. Typically, those people are nonwhite, low-income, and urban dwellers.
Now the same charges are being made against insurance companies. Hearings have been held in Congress on the subject. One nationwide group, the Association of Community Organizations for Reform Now (ACORN), recently released studies purporting to show discriminatory practices by insurance companies in 14 cities in the United States.
Those who make the charges say the evidence shows a calculated effort by companies to avoid doing business in urban neighborhoods, a tactic outlawed in most states. Industry spokespeople spurn the "evidence" as flawed and say their decisions on whom to insure are based on legitimate business practices.
ACORN staff members in various cities randomly surveyed agents to see if they could get price quotes over the phone on homeowner's insurance for properties in various neighborhoods and towns. They claim to have found consistent reluctance to deal with people from poorer areas: Callers inquiring about insurance for homes in those communities were refused a quote 38 percent of the time, while those from wealthier towns were turned down 7 percent of the time, according to ACORN.
Willy Walton participated in an ACORN phone survey of agents in the Boston area, which was done separately from the 14-city national study. He says that calls about coverage in low-income neighborhoods, like the Dorchester section of Boston, met with a barrage of questions about ZIP codes, de-leading certificates, and the state of the dwelling's wiring. Most agents said they would have to see the house, Mr. Walton said. By contrast, callers asking about homes in the affluent suburb of Lexington usually were given a quote, with few questions asked.
Such surveys say little about access to homeowner's insurance, says Marc Rosenberg, vice president of the Insurance Information Institute, which represents the industry in Washington. There's no correlation between the inability to get a price quote on the phone and the ability to actually buy insurance, he says, adding that other data have shown that roughly 93 percent of all US homeowners have coverage. Further, Mr. Rosenberg says, many agents are told not to give quotes on the phone.
Then why did so many callers claiming to be from wealthier areas get quotes, asks Gregory Squires, a sociology professor from the University of Wisconsin. …