Study Shows Discrimination by Insurers : Homeowners: Report is called first hard evidence that minorities, poor have less chance of coverage.

The most comprehensive study to date on discrimination among insurers shows that poor people and minorities across the country have a harder time obtaining homeowner insurance and that they pay higher premiums.

The study, issued last week by the National Assn. of Insurance Commissioners, concludes that insurers do not offer homeowner policies in urban areas populated by minorities and people with low incomes. The study also shows that insurers charge higher premiums in these markets.

The findings are not new, insurance regulators said, but they mark the first time hard evidence has been formulated to prove the existence of discrimination.

“The study implies that there’s a national problem of significant proportion,” said J. Robert Hunter, former Texas insurance commissioner and a member of the association’s task force on insurance availability.

The association studied insurance company data about homeowner coverage since 1992 in 59 cities in 20 states. It is the first study to track insurance trends by ZIP codes.

The NAIC looked at the concentrations of minority populations within ZIP codes and concluded that there is a direct correlation between the price and availability of homeowner insurance and the presence of minorities.

“If enough insurance companies are competing for the business, you should have the lowest premiums and the higher-quality coverage,” said Robert M. Willis, insurance commissioner in Washington and chairman of the availability task force. “That is not being achieved where you have a high predominance of minorities.”

The study does not name specific insurers that discriminate.

The problem stems from underwriting policies that restrict coverage based on property values, credit histories of homeowners and subjective judgments about an applicant’s “lifestyle, stability and morals,” the report says.

“Such subjective criteria may lead to uneven and possibly unfairly discriminatory application by different agents and underwriters,” it says.

Industry executives said that fewer urban residents have insurance because fewer of them own homes. They also contend that many minority homeowners are covered by Fair Access to Insurance Requirements plans, government-mandated programs for providing insurance in high-risk areas.

“We’re not surprised by the study,” said Sean Mooney, senior vice president and economist of the Insurance Company Institute, a trade group.

The study recommends solutions ranging from limited regulations promoting fair competition and prohibiting unfair trade practices to more severe laws mandating coverage and using undercover investigations to pinpoint discrimination.

The institute said the NAIC will conduct similar studies on discrimination among auto and commercial insurers in 1995.