Insurers to Direct Riot Victims to Minority Firms

Responding to criticism that residents of South Los Angeles are being excluded from the reconstruction effort, a group of insurance companies has agreed to provide policyholders with lists of minority contractors who can be hired for rebuilding work.

Moreover, the firms--including several of the state’s largest insurance companies--will send letters urging their customers to employ registered contractors from South Los Angeles and other areas hard hit by rioting.

The agreement was secured over the last two weeks by Gov. Pete Wilson’s Committee on Revitalizing Los Angeles, working with insurance industry officials and representatives of the African-American, Korean-American and Latino business communities.

It comes on the heels of severe criticism directed at the insurance industry by minority community leaders, who have charged that insurers have ignored minority contractors.

Officials believe the pact is an important first step, even though provisions of the agreement are voluntary. The lists of minority contractors, for example, will be provided only on request.

“What we are trying to do is forge cooperation between the industry, contractors and the community,” said state Corporations Commissioner Thomas Sayles, who is chairman of Wilson’s committee. “Is this the end-all, the panacea? No, but it is a step in the right direction.”

Companies involved in the plan are Allstate, the California FAIR Plan, Fireman’s Fund, State Farm and Transamerica. Each of the insurers will appoint a liaison to deal with concerns raised by minority contractors. Lists of firms owned by women and disabled veterans will also be made available to policyholders.

In addition, the companies agreed to explore ways of investing in riot-damaged South Los Angeles communities, including establishing ties with local financial institutions, Sayles said.

Insurance companies are expected to pay out more than $700 million to cover riot damage on thousands of buildings. But minority community leaders have complained that much of the lucrative demolition and reconstruction work is being funneled to white-owned firms.