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Guskind, R. 1989. Thin red line. National Journal 21:2639-43.

Hoyt, J., and M. Choca. 1989. The silent partner: The insurance industry's potential for community reinvestment. Chicago: Woodstock Institute.

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1989b. Telephone interview with G. D. Squires. 2 December.

Massey, D. S., and N. A. Denton. 1989. Hypersegregation in U.S. metropolitan areas: Black and Hispanic segregation along five dimensions. Demography 26:373-91.

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Midwestern Regional Advisory Committees to the U.S. Commission on Civil Rights. 1979. Insurance redlining: Fact, not fiction. Washington, DC: Government Printing Office. Newman, C. 1988. Interview with G. D. Squires. Milwaukee, WI, 23 April. Norman, J. 1989. Congenial Milwaukee: A segregated city. In Unequal partnerships: The political economy of urban redevelopment in postwar America, edited by G. D. Squires, 178-201. New Brunswick, NJ: Rutgers Univ. Press.

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. 1988. Insurance redlining and the process of discrimination. Review of Black Political Economy 16:63-75.

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Gregory D. Squires is a professor of sociology and a member of the Urban Studies Program Faculty at the University of Wisconsin-Milwaukee. His research has been focused on the process of urban development and the consequences for minority communities. Recent publications include the coauthored book Chicago: Race, Class, and the Response to Urban Decline (Temple University Press, 1987) and an edited book on public-private partnership, Unequal Partnerships: The Political Economy of Urban Redevelopment in Postwar America (Rutgers University Press, 1989).

William Velez is an associate professor of sociology at the University of WisconsinMilwaukee. He is currently studying the school performance of Latino ninth graders in predominantly minority high schools. Among his publications is “High School Attrition Among Hispanic and non-Hispanic White Youths" (Sociology of Education 62:119-33, 1989).

Karl E. Taeuber is a professor of sociology at the University of Wisconsin-Madison, a member of the Center for Demography and Ecology, and an affiliate of the Institute for Research on Poverty. He is studying change in patterns of racial residential segregation by social class and the implications for spatial isolation of the poor. In another project, he is analyzing trends in school segregation during the 1980s. Recent papers include "Residence and Race: 1619-2019" in Winston A. Van Horne and Thomas V. Tonnesen (eds.) Race: Twentieth Century Dilemmas - Twenty-First Century Prognoses (Milwaukee: Institute on Race and Ethnicity, University of Wisconsin, 1989) and "The Contemporary Context of Housing Discrimination" (Yale Law and Policy Review 6:339-47, 1988).

L

STATEMENT

from the

(Alliance

of American Insurers

TESTIMONY OF DAVID M. FARMER
BEFORE THE

HOUSE BANKING, FINANCE AND URBAN AFFAIRS COMMITTEE

SUBCOMMITTEE ON

CONSUMER CREDIT AND INSURANCE

CONCERNING

URBAN INSURANCE AVAILABILITY

FEBRUARY 24, 1993

Mr. Chairman, members of the Subcommittee, ladies and

gentlemen, my name is David M. Farmer. I am vice president of

federal affairs for the Alliance of American Insurers, a national trade association representing approximately 180 property/

casualty insurance companies.

We at the Alliance appreciate the

opportunity to express our views on the subject of urban property insurance before this panel.

At the outset, let me say that the members of the Alliance and the rest of the industry are committed to serving the property insurance needs of all Americans, regardless of race, ethnicity or economic class. We are committed to addressing, in a positive way, any real or perceived problems in this area. We believe that better understanding of the property insurance system is necessary both for this subcommittee, and, for people who believe that the system unfairly discriminates against them.

I understand that urban auto insurance and its availability also may be the subject of inquiry by this panel. Although not a formal part of my testimony here today, we would be happy to respond to any questions that the subcommittee may have on automobile insurance as well.

Let me begin by briefly describing how the property insurance mechanism has changed and responded to the specific needs of the urban marketplace. In the wake of the civil disturbances and riots which afflicted many of our nation's major cities

during the 1960s, there were some property insurance market failures. Property losses in Watts, Detroit, Newark and the District of Columbia, combined with the prospect of further disturbances and losses to come, created severe property insurance availability problems.

At that time, President Johnson created a federal advisory panel on insurance in riot-affected areas. Among the many distinguished members of this panel was the first mayor of the District of Columbia, Walter E. Washington. In the foreword to

their 1968 report, the advisory panel made the following statement:

"We gathered information from across the country. We conducted interviews in various cities, systematically surveyed urban homeowners and businessmen, and requested written information from a variety of interested parties: state regulators, insurers, reinsurers, city officials, police and fire departments, and others."

After several days of formal hearings, the panel decided they would attempt to measure the nature and extent of the problem. The advisory panel itself held seven separate meetings at which scores of witnesses presented their views. The panel interviewed witnesses in 20 cities and attempted to verify their findings by a scientific study of six cities which involved 3,000 interviews.

In a separate project, the staff mailed question