WASHINGTON -- The House took a small step this week toward requiring the insurance industry to meet the kind of community reinvestment standards long faced by banks.
And while the House-approved measure was mild compared to the anti-redlining laws on the books for banks, community activists are cautiously optimistic that the Senate will add teeth to the measure.
"It is not impossible that we will get a couple of things back," said Deepak Bhargava, legislative director for the Association of Community Organizations for Reform Now, or ACORN.
Sen. Donald W. Riegle, D-Mich., chairman of the Banking Committee, is expected to introduce his own anti-redlining measure soon and Mr. Bhargava said the Riegle bill will be much tougher than the legislation approved by the House.
Bankers Blame Insurers
The outcome of the debate has important implications for banks, who have long argued that the unavailability of insurance is a major obstacle for them in trying to make loans in low-income areas.
Without insurance, many loans - especially mortgage loans - cannot be made. And banks and thrifts pay a price when they are examined for compliance with the Community Reinvestment Act.
Insurance anti-redlining legislation is "like a 'mini CRA' for insurance companies," said Ron Ence, director of legislative affairs at the Independent Bankers Association of America.
"It holds their feet to the fire a little more and sends a signal that we're not in this alone," Mr. Ence added.
"If we're going to meet the needs of the community, the insurance industry and the banking industry will have to work together," he said.
Philip Corwin, a lobbyist for the American Bankers Association said the bill would increase insurance availability, even though it mandates disclosure requirements rather than any particular standard of behavior.
Consequently, it will "assist banks in making loans in these areas," Mr. Corwin said.
"A lack of insurance availability interferes with banks' fulfilling their Community Redevelopment Act responsibilities," Mr. Corwin said. "Banks alone should not bear the full responsibility for CRA-type activities."
Applies to Top 25 Areas
The bill approved by the House Wednesday would require large insurance companies to provide the Commerce Department with information on sales of automobile and property insurance policies in the 25 largest metropolitan areas, which account for around half of the U.S. population.
Sen. Riegle's bill is expected to require data for more cities than is the case in the House bill. In addition, the Riegle measure is expected to mandate reporting by census tract, rather than zip code.
"ZIP code areas can be 60 times bigger than census tracts," said Mr. Bhargava. "If you just look at zip codes, you don't know if the loans are going to poor areas or wealthy areas."
The Riegle bill, which could be introduced as early as next week, is also expected to require insurers to track and report on the race and sex of policyholders.
In addition to the Riegle bill, the Senate also has before it a measure introduced by Sen. Russ Feingold, D-Wis.
House Jurisdiction Split
Unlike the Senate, where the banking committee has jurisdiction over insurance legislation, responsibility in the House is split between banking and the Energy and Commerce Committee.
Both panels voted out legislation, and the measure reported by the House Banking Committee was much tougher on the insurance industry than the Energy and Commerce bill.
The House Rules Committee, which clears legislation for floor action, chose to put the Energy and Commerce bill before the House, but it also allowed elements of the Banking Committee measure to be considered as amendments.
Gonzalez Backs Equity
The Energy and Commerce bill requires insurance companies to report the number of households and vehicles insured by the companies as well as the number of policies and insurance agents and amount of premiums earned. Insurers would also have to report the number of policy cancellations and nonrenewals.
During debate on the House floor Wednesday, House Banking Committee chairman Henry B. Gonzalez, D-Tex., said insurance companies should be subjected to "the same fact-gathering that we now require banks to provide."
The House defeated an amendment offered Wednesday by Rep. Joseph Kennedy 2d, D-Mass., and Rep. Gonzalez that would require the Department of Housing and Urban Development to collect the data instead of the Commerce Department.
The vote was 343 to 88 against the amendment.
Who's in Charge Here?
Behind the vote was a jurisdictional dispute. If HUD is named to collect data, the House Banking Committee would receive the information; if Commerce gets the nod, Energy and Commerce would get it.
A second amendment would have increased the breadth of data collection to the 75 largest metropolitan areas and would have required insurance companies to provide information on the race, ethnicity, and gender of policy applicants and holders.
It was soundly defeated along with an amendment offered by Rep. Jack Fields, R-La., that would have required insurance companies to report why policies had been denied or not renewed.