Squires and Velez 75 biases detected in the communication between agents and testers are unlikely to be caused by sampling error. In the third comparison, request of tester name by agent, moderate estimates of size effect and power value were obtained (.40 and 57 respectively). 22. David Hoeh, Access to Residential Property Insurance in Milwaukee County, (Milwaukee: Milwaukee Community Housing Resource Board, 1983). 23. Gregory D. Squires and William Velez, “Insurance Redlining and the Transformation of an Urban Metropolis." 24. Judy Wenzel, “Banks Find Social Conscience," Milwaukee Journal, November 16, 1986, page ID. William L. Sartoris and William T. Moore On the Existence of a Dividend Clientele in the Market for Modeling the Ratings Game: Publication Performance, Departmental John Golden, Fred V. Carstensen, Paul Weiner and Steve Kane THE QUARTERLY REVIEW OF ECONOMICS AND BUSINESS is published by the Bureau of Economic and Business Research, College of Commerce and Business Administration, University of Illinois. Subscription rates are $18.00 a year for individuals and $29.70 a year for organizations, associations, etc,; single-copy price, $10.50. Foreign subscription rates are $20.00 a year for individuals and $32.40 a year for organizations, associations, etc.; single-copy price for a non-US address is $12.50. Manuscripts and communications for the editors and business correspondence should be addressed to the QUARTERLY REVIEW OF ECONOMICS AND BUSINESS, University of Illinois, 428 Commerce West, 1206 South Sixth Street, Champaign, IL 61820. FOREWORD: Community Reinvestment Is Good for Cities, Good for Lenders, Edward McDonald 1. Community Reinvestment: An Emerging Social Movement, Gregory D. Squires 2. The Struggle for Community Investment in Boston, 1989-1991; James T. Campen 3. Reinvestment and Revitalization in Pittsburgh, John T. Metzger 4. Confrontation, Negotiation, and Collaboration: Detroit's Multi-Billion-Dollar Deal, David Everett 5. Reinvestment in Chicago Neighborhoods: A Twenty-Year Struggle, Jean Pogge 6. Milwaukee: A Tale of Three Cities, Michael L. Glabere 7. Reluctant Response to Community Pressure in Atlanta; Larry E. Keating, Lynn M. Brazen, and Stan F. Fitterman & California: Melding Statewide Advocacy, Local Government, and Private Industry Initiatives, David Paul Rosen 9. The Legacy, the Promise, and the Unfinished Agenda, Calvin Bradford and Gale Cincotta Gregory D. Squires is Professor of Sociology and a member of the Urban Studies Program faculty at the University of Wisconsin-Milwaukee. He is co-author of Chicago: Race, Class, and the Response to Urban Decline (Temple). Conflicts in Urban and Regional Development Series 6 x 9° 288 pp. ISBN 0-87722-984-8 $39.95 FROM REDLINING ΤΟ REINVESTMENT Community Responses to Urban Disinvestmer Edited by Gregory D. Squires "Greg Squires has assembled America's leading ex perts on community reinvestment—not just academic experts but neighborhood veterans of combat, negotiation, and agreement with lenders." -Bill Dedman, author of the Pulitzer Prize-winning series, "The Color of Money," published by the Atlanta Journal/Constitution “... makes an important and valuable contribution to filling important gaps in the literature.... I recommend it to everyone with an interest in the field community activists seeking to learn how to put to gether a reinvestment strategy; lenders looking for insight into what community groups want; and, researchers and reporters attempting to learn more about origins of the neighborhood reinvestment movement." -Allen Fishbein, general counsel for Signature In a recent study of insurance redlining the Midwestern State Ad- 1 3 4 With increasing frequency, residents of urban areas are complaining that they cannot obtain essential property insurance at affordable rates through the voluntary market. These complaints are being registered with community organizations, state insurance regulatory officers, 2 and city, state, and federal legislative committees. In many cases, the complaints go beyond individual grievances and charge that entire neighborhoods are unable to obtain property insurance. This practice of denying insurance to residents of a particular geographic area has come to be known as insurance “redlining.”7 • Regional Counsel, U.S. Commission on Civil Rights, Midwestern Regional Office. B.A.. Heidelberg College; M.S., Ph. D., Northwestern University; J.D., DePaul University College of Law. ** Research/Writer, U.S. Commission on Civil Rights, Midwestern Regional Office. B.S.. Northwestern University; M.A., Ph.D., Michigan State University. *** Professor of Psychology, Loyola University, Chicago, Illinois. B.A., Oberlin College; M.S., Ph.D., Northwestern University. 1. Address by G. Cincotta, National Training and Information Center. Insurance Redlining and Reinvestment: Directions for Change Conference (Chicago, Ill., March 23, 1979). 2. A. Valukas & R. Bollow, An Investigation of Discrimination in the Sale of Homeowners Insurance in Illinois 8 (Sept. 6, 1977) [hereinafter cited as Valukas & Bollow]; ILLINOIS DEPT OF INSURANCE, REDLINING: THE ILLINOIS EXPERIENCE 1 (Oct. 1977). 3. B. Soldwisch, testimony presented before the Finance Committee of the City Council, Chicago, Ill. (Jan. 12, 1978). 4. Insurance Bureau, Michigan Dep't of Commerce, Essential Insurance in Michigan: An Avoidable Crisis 6 (Mar. 14, 1977) (hereinafter cited as Essential Insurance]. 5. Rights and Remedies of Insurance Policyholders: Hearings Before the Subcomm. on Citizens and Shareholders Rights and Remedies of the Senate Comm. on the Judiciary, 95th Cong., 2d Sess., pts. 1, 31, 53, 61, 67 (1978) (testimonies of Barbara Pertz (Cleveland), Morton Olshan (real estate investor), Grace Evans (St. Louis), and James McBride (Chicago)) (hereinafter cited as Rights and Remedies Hearings]. 6. See Valukas & Bollow, supra note 2, at 20. 7. Insurance redlining, for purposes of this article, is defined as refusing, because of the geographic area within which property is located, to insure or refusing to continue to insure, or varying the amount or type of insurance coverage, or varying the terms or conditions under which insurance coverage is available to homeowners or tenants. 315 8 [Vol. 29:315 This article discusses insurance redlining within the framework of federal antitrust and selected federal and state constitutional and statutory civil rights laws that afford an aggrieved person a cause of action. State statutes regulating insurance companies are not reviewed except to the extent that state regulatory law is germane to federal law. 10 Further, this article examines the potential impact of state constitutions on redlining abuses. Particular emphasis is placed on the Illinois Constitution because of its unique provision concerning the rights of "all persons" to buy and sell property, 11 a provision that echoes federal civil rights law 12 and that must surely include insurance. It should be noted that no civil rights statutes have been enacted, at least in Illinois, that specifically prohibit racial discrimination in the sale of property, including insurance. THE PROBLEM Insurance companies generally have responded to redlining complaints by denying that they use factors associated with a geographic area, such as neighborhood racial or ethnic composition, as determinants of insurability. 13 Insurers typically have maintained that geographic redlining is 8. Administrative remedies with judicial review are available for redress of violations of the Illinois Insurance Code. ILL. Rev. Stat. ch. 73. §§ 1013-1019.2, 1028-1040 (1977). 9. See id. §§ 204.1-1153 (1977). 10. Under the McCarran-Ferguson Act, insurers are exempt from federal antitrust laws to the extent they are regulated by state law. 15 U.S.C. § 1012 (1976). See notes 50-53 and accompanying text infra. 11. ILL. CONST. art. I, § 17. This provision states: All persons shall have the right to be free from discrimination on the basis of race, color, creed, national ancestry and sex in the hiring and promotion practices of any employer or in the sale or rental of property. These rights are enforceable without action by the General Assembly, but the General Assembly by law may establish reasonable exemptions relating to these rights and provide additional remedies for their violation. Also, an insurance policy generally is itself personal property. 12 J. Appleman, InsURANCE LAW AND PRACTICE $ 7007, 7016 (1968); Hanover Ins. Co. v. Tyco Indus., Inc., 500 F.2d 654 (3d Cir. 1974); Gurnett v. Mutual Life Ins. Co., 356 Ill. 612, 191 N.E. 250 (1934); Oldham's Trustee v. Boston Ins. Co., 189 Ky. 844, 226 S. W. 106 (1920); In re Helpert's Estate, 300 N.Y.S. 886, 165 Misc. 430 (1938). 12. 42 U.S.C. 1982 (1976) provides: "All citizens of the United States shall have the same right, in every State and Territory, as is enjoyed by white citizens thereof to inherit, purchase, lease, sell, hold, and convey real and personal property." 13. Rights and Remedies Hearings, supra note 5, at 200, 202 (testimony of Stephen I. Morton, Vice President, The Hartford Group). Martin stated that the automobile insurance industry does not discriminate on basis of race, color, creed, national origin, or religion but rather uses a rating system composed of objective criteria such as territory, place of garaging, age of driver, sex, martial status, use of motor vehicle, driver education completion, age, make and model of vehicle, and traffic violations. He further stated that the objective of such an underwriting system is to limit loss, which the Hartford Group placed at $162.3 million over the period 1972-76 for personal automobile underwriting. Finally, since many legislative acts in the various states (unspecified) inhibit underwriting practices, his company discourages new business in those areas. |