Redlining Focus Expanding, Advocates Say in Wake of Insurance Verdict

Pointing to a record $100-million discrimination judgment against Nationwide Insurance, fair-housing advocates said Tuesday that efforts to uncover racial redlining now are expanding beyond the banking and mortgage industries to insurance underwriters.

A Richmond, Va., jury Monday ordered Nationwide to make the payment to Housing Opportunities Made Equal, or HOME, a local housing rights group that brought a lawsuit against the Columbus, Ohio-based insurer. In its suit, HOME charged Nationwide with refusing to issue policies to “testers” seeking to insure homes in black neighborhoods and charging African Americans more than whites to insure comparable homes.

In addition to the $100 million in punitive damages--which federal officials described as the largest award granted by a jury in a housing discrimination case--the Richmond Circuit Court jury ordered Nationwide to pay $500,000 in compensatory damages to cover the cost of the investigation.

“This is a wake-up call to the insurance industry,” said Ken Zimmerman, deputy assistant secretary for enforcement and programs in the Housing and Urban Development’s Office of Fair Housing. “This jury verdict indicates the ramifications of not taking [redlining] seriously.”

Constance Chamberlin, executive director of HOME, said that her group started investigating insurance companies for possible discrimination in 1995. During a 15-month period, the fair-housing activists had pairs of testers--one black and one white--call Richmond-area insurance companies seeking homeowner policies. The black testers requested quotes for homes in predominantly black neighborhoods, and the white testers asked for quotes for homes in mostly white communities.

“Seven of 15 times the whites got quotes and the blacks didn’t,” he said. “That’s a huge amount.”

Nationwide officials disputed the validity of the tests and said that they would appeal the verdict to the Virginia Supreme Court.

John Millen, a spokesman for Nationwide, said that the company was already under a racial discrimination consent decree stemming from previous charges of unfair business practices leveled by HUD and the Justice Department. “We’re abiding by the terms and spirit of that consent decree,” he said. “We are following through aggressively and have put forward an ambitious marketing plan to attract inner-city customers.”