Anti-redlining home insurance bill lacks teeth


Washington -- Here's the headline many congressmen up for election this November would like homeowners and buyers to read this week: "House passes tough anti-redlining home insurance legislation. Minority and low-income consumers to gain new fair housing protections."

But here's the real headline: "House passes toothless bill" that will do virtually nothing to curb central city redlining in home insurance policy availability, pricing or coverage.

By a voice vote July 20, the House defeated a bill approved by its banking committee that had the strong support of consumer, civil rights, and housing groups concerned about discriminatory home insurance practices in urban markets around the country. The measure would have applied some of the same racial and locational data-gathering and public disclosure requirements on the insurance industry that the banking industry currently complies with under the Home Mortgage Disclosure Act (HMDA) and the Community Reinvestment Act (CRA).

Redlining refers to the practice of refusing to write home insurance policies, charging sharply higher premiums, offering substandard coverage or discouraging applications. One group, the Chicago-based Association of Community Organizations for Reform Now (ACORN), testified that in some of that city's low-income minority neighborhoods, nearly half of occupied single-family homes go without hazard insurance altogether.

The anti-redlining bill rejected by the House July 20 would have moved insurers toward an HMDA-like data collection system. In the 75 largest metropolitan areas of the country, property insurers would have been asked to compile and disclose the number of policies underwritten or rejected by census tract, the premiums charged, race and gender of applicants, cancellations, nonrenewals and loss data. The bill that passed the House (HR 1188), however, will cover only the 25 largest cities, and won't deal with even the most elemental factor involved in identifying discrimination: It won't require insurance companies to collect or disclose any data on race or gender of applicants accepted or rejected.

Nor will it document geographic discrimination, since insurers will only have to disclose application and policy data by ZIP code, not census tract.

What is the key distinction between ZIP codes and census tracts? For starters, ZIP codes typically are from 10 to 60 times larger than census tracts.

How'd this happen? Tough lobbying by the insurance industry, which denies that redlining exists in the first place, or needs documentation. But the key reason why the tougher bill went down in flames, say lobbyists on both sides of the issue, might be hard for the average consumer to appreciate: A jurisdictional turf war between two veteran Democratic committee chairmen.

Banking committee head Rep. Henry B. Gonzalez of Texas pushed for a piece of insurance industry oversight -- an extension of his traditional turf in the view of some Capitol Hill observers. He ran into one of the fiercest turf protectors in Congress, Energy and Commerce Committee Chairman John Dingell of Michigan. Gonzalez lost the battle. And in the process, so did minority and central city homebuyers.

Kenneth R. Harney is a syndicated columnist. Send letters care of the Washington Post Writers Group, 1150 15th St. N.W., Washington, D.C. 20071

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