WASHINGTON -- A powerful minority group is turning to state legislatures in an effort to subject insurance companies to some of the same Community Reinvestment Act requirements that banks face.
The National Black Caucus of State Legislators announced last week that it will present model anti-insurance redlining legislation to the 44 states in which the caucus has members
Charles R. Stith, national president of the Organization for a New Equality, said a successful attack on insurance redlining would produce increased lending by banks and thrifts in low-income communities.
"There is a symbiotic relationship between CRA reform in the banking industry and the need for similar reform in the insurance industry," said Mr. Stith, whose
Boston-based community organization is working in conjunction with the black caucus.
"The point is simple," Mr. Stith said. "We can push banks to do mortgages and small-business loans in communities of color and poor communities, but if persons are unable to get mortgage insurance for their businesses, then banks cannot do the loans."
The proposed legislation would require insurers to submit disclosure reports annually to state insurance commissioners. These reports would contain information on the number of new policies written, the number of policies canceled,-and the number not renewed in each ZIP code.
The race and gender of insurers' employees and management would have to be disclosed, as well.
Although legislation addressing insurance redlining was recently approved by the U.S. House of Representatives and has been introduced in the Senate, the minority group felt that the issue warranted immediate attention.
"It's like health care," said Lois DeBerry, president of the black caucus "You can't wait on this. You have got to branch out to the states and get started."
However, Mr. Stith added, the state initiative should serve as a supplement, not as an alternative, to anti-insurance redlining bills in Congress.
"This should be looked upon as a complement to Congress," Mr. Stith said. "Because insurers are regulated by states, this will only give added momentum to efforts at the congressional level."
The insurance industry is raising the same objections to CRA-like disclosures that banks did when they were first subjected to the requirements, said Mr. Stith.
"It echoes the resistance we heard from the banking industry years ago;, he said. "But today, we're finding some of the strongest parts of some banks' portfolios are in the mid- to low-income mortgage area."
