A post on Sam Friedman’s blog at National Underwriter has me thinking. (Danger, Will Robinson! Danger!). I posted a response at NU, but I’m going to extend my thoughts here.
Sam writes:
One of the most important and interesting developments at the recent NAIC meeting came in under the radar and took most insurers by surprise–a controversial call to force homeowners carriers to collect and disclose data on the race, gender and income bracket of their prospects and clients. In responding, insurers are damned if they do and damned if they don’t support the proposal. [...]
Obviously, Mr. Squires is eager for insurers to collect and provide access to such data to see once and for all if insurers are actively engaging in redlining, or are passively doing so–via disparate impact (in other words, even if their intent is non-discriminatory, the end result comes out that way, unfairly disadvantaging one racial, gender or economic group).
Just as obviously, insurers don’t want to collect such data because, for one, it might very well expose them to lawsuits over their underwriting patterns–however neutrally they are applied–and it might annoy or provoke those asked to list their race, income, etc., on a homeowners insurance application.
Mr. Squires argues effectively that he is not reinventing the wheel here. Essentially, he says he is simply calling for the same data required of home mortgage lenders under the federal Home Mortgage Disclosure Act. He told the NAIC that HMDA and other fair-lending laws helped improve access to credit for low-income and minority markets, and suggested the same might be said of insurance down the road.
The short answer I posted in the responses section still applies — if the goal is to collect the same demographic information that is already captured by mortgage brokers, then analysts ought to simply collect both insurance and mortgage demographic data, and merge the two data sets, avoiding pestering consumers unnecessarily.
However, with some additional thought (dusting off older thoughts, actually), I can offer a few points that ought to be addressed in any proposal to analyze industry data for evidence of “redlining” or other forms of unfair discrimination:
