WASHINGTON - The House Banking Committee has voted to hold the insurance industry to the same kinds of reporting requirements that banks have dealt with under the Home Mortgage Disclosure Act and similar laws.
While the measure doesn't affect banks and thrifts directly, some industry lobbyists believe the bill offers significant benefits.
Insurance availability is a big problem for banks trying to lend into low-income communities, said Philip Corwin, a lobbyist for the American Bankers Association. Often, he said, loans can't be made because insurance can't be purchased.
"There's a direct link between lack of insurance and our CRA and HMDA numbers, he said, referring also to the Community Reinvestment Act.
Called a Diversionary Tactic
Moreover, Mr. Corwin said, the bill undermines the insurance industry's efforts to obtain legislation limiting bank insurance powers. In particular, bankers are concerned about efforts by insurers to limit the ability of banks to sell insurance nationwide from small towns.
"By giving them another issue, they have to divert their resources," said Mr. Corwin of the insurance lobby.
In addition, he said, the legislation means insurance groups would be seeking limits on bank powers "at the same time Congress is finding they are not serving large chunks of the public."
However, Robert Rusbuldt, a lobbyist for the Independent Insurance Agents of America, said the bankers' arguments won't wash.
Reluctant Underwriters
"Banks already can sell out of towns of under 5,000 into the inner cities," Mr. Rusbuldt said. "The problem is, you can't find an insurance company to underwrite that risk."
The arguments advanced in favor of the bill sounded like the criticisms that have been leveled at banks in recent years.
"Shocking anecdotal evidence of redlining is backed up by statistics," Rep. Joseph P. Kennedy 2d, D-Mass.
Party Line Followed
"Data collected over a 12-year period by Missouri's insurance commissioner shows that low-income minorities a more for less coverage than their white counterparts, even though their losses were less," he added.
The Kennedy bill, which passed the banking committee on a 30-to-19 party-line vote, requires insurers to report on insurance sales for homeowner, small-business, and auto loans in 150 large metropolitan areas.
The reports would be broken down by census tracts, and would include information on the racial characteristics of policyholders and individuals denied insurance.
While the bill focuses on disclosure, some observers believe the measure is a first step toward setting Community Reinvestment Act-style standards for the insurance industry.
Scaled-Back Version
In an effort to hold Democrats together, the bill was scaled back from the version that passed the consumer credit and insurance subcommittee, which Rep. Kennedy chairs. Antipoverty and consumer organizations objected strongly to the changes.
Still, the bill is much tougher than a competing measure that passed the House Energy and Commerce Committee a week earlier, and advocates for low-income communities may find themselves fighting to maintain the banking committee measure.
Both committees claim jurisdiction over insurance matters, and the House leadership may have to arbitrate the competing claims before a bill can go to the floor.
The Clinton administration weighed in this week with a letter that appears to favor the banking committee version.
