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spection practices would have led to any rejections of applications. Two Milwaukee insurance agents who attempt to serve the central city informed us, in confidential interviews, that it is common for insurance companies to offer on the telephone to inspect inner city properties and then issue the appropriate policy, only to never show up for the inspection. When Mr. Sirola was asked what the likelihood would be of the more rigorous inspection leading to a rejection of the application, he said such an inspection (one requiring an examination of the exterior or any inspection of the interior) was "unheard of" Consequently, he could not say what the likely outcome of such an inspection would be. If such inspections were unknown to Sirola, they represent a very real factor for many Milwaukee insurance consumers. And it is clear the consequences of such inspection policies could only be adverse for nonwhite communities compared with similar white areas.

These tests revealed no outright refusal to write insurance in, or intentional discrimination against, Milwaukee's minority communities.-In only three of these 60 tests did agents not offer to provide coverage. Two involved testers from nonwhite areas and one represented a white community. A critical issue that could not be examined was the price. Unfortunately, testers simply indicated a desire to puchase insurance without providing sufficient details about the protections they wanted, to assure that agents would be quoting prices on comparable policies. So when agents offered insurance the deductibles, exclusions, coverage, and other terms were so varied that even though the properties and financial circumstances among team members were comparable, it was difficult to interpret the price differences that were quoted.

At the same time, these tests did reveal an expressed preference on the part of these insurance agents to solicit business in white neighborhoods and a systematic tendency to place additional barriers in the way of homeowners in nonwhite communities who are seeking property insurance.21 If the overt racially discriminatory practices of earlier years have become the exception, subtle practices that still have a discriminatory effect remain imbedded in the process by which property insurance is marketed in Milwaukee. Such developments within the insurance industry parallel changes in other institutional sectors of the housing industry where blatant forms of discrimination have given way to more subtle forms of bias. POLICY IMPLICATIONS

Milwaukee, like many communities around the nation, has responded to the insurance redlining problems that have been documented in that

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community for at least 20 years. 22 The state has declared insurance redlining to be a violation of its insurance laws, and racially-based redlining to be a violation of its fair housing law. The Office of the Insurance Commissioner instituted a disclosure program requiring major insurers to report, on a quarterly basis, the number of policies they write by zip code in the state's major metropolitan areas. Local insurers have collaborated in the establishment of a Consumer Insurance Information Center to help people with any insurance problems, including redlining. These steps, along with the actions taken at the federal level discussed earlier, have undoubtedly contributed to the reduction of the most blatantly discriminatory behavior, including the absence of any findings in these tests of widespread refusal to write insurance in particular neighborhoods.

Yet disparities remain in the availability of insurance that are associated with the racial composition of Milwaukee neighborhoods.23 Many steps could be taken to reduce those disparities. The Metropolitan Milwaukee Fair Housing Center frequently receives complaints of insurance redlining. The insurance commissioner's office should more effectively follow up these complaints and should use its own disclosure reports to target selected companies for more rigorous investigations.

In Milwaukee several community organizations have formed a community reinvestment coalition in an effort to increase lending in the city. With the leverage provided by the federal Community Reinvestment Act, which requires lenders to be responsive to the credit needs of their communities, the coalition has negotiated lending agreements totalling over $75 million with two major local lenders.24 The coalition should expand its focus and attempt to bring local insurers into these "partnerships" for the purposes of increasing the pool of investment dollars and the availability of property insurance.

Insurance commissioners in most states, including Wisconsin, regularly carry out market conduct examinations in which they explore all phases of selected companies' marketing behavior (e.g. types of products, prices, underwriting practices). Inspection policies should be examined more carefully and regulations should be developed so that consumers are not subjected to variant inspection practices because of the racial composition of their communities.

It would be impractical and undesirable to try to regulate every aspect of the communication between insurers and consumers. Yet the subtle dimensions of such communication can be quite costly, particularly for residents of minority communities. Formal training of insurance agents, underwriters, and others involved in the marketing of insurance, however,

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would alert them to the unintended racially discriminatory consequences of certain practices. Across the country, including Milwaukee, real estate agents receive fair housing training from public and private fair housing organizations. Similar arrangements between fair housing centers and the insurance industry could help reduce the disparate treatment residents in nonwhite communities frequently receive.

If the nation's ghettos have not been replaced with truly integrated and balanced living patterns, progress has been made towards the goal of fair housing. At least part of this progress can be explained by successful efforts to reduce the extent to which key actors in the housing industry, including property/casualty insurance companies, have counted by race. At the same time it is evident serious problems remain. Equally evident is the fact that tools are available to attack those remaining problems.

RACIAL DISCRIMINATION: AN EVOLVING PROCESS

Overt and intentional racial discriminatior has faded from the official realms of the housing industry. Real estate agents no longer list homes as either "white" or "black" properties. Race is no longer used as an explicit category by appraisers and lenders. Fair housing is required by federal law and by state law in Wisconsin and many other states. Hundreds of municipalities have issued their own fair housing ordinances. And the red lines have disappeared from most insurance company underwriting manuals.

But fair housing is not a reality in Milwaukee or in virtually any other metropolitan area in the United States today. Explicit utilization of racial categories has given way to more subtle forms of discrimination. Racial steering, though sometimes done for benign purposes, remains a common practice and restricts housing opportunities for minorities (and for nonminorities, as well). Lenders and appraisers utilize a range of neighborhood factors in their underwriting practices that deny minorities equal access to credit and adversely affect minority communities. Fair housing laws often go unenforced.

This examination of the process by which insurance is sold reveals similarly subtle forms of discrimination in the insurance market. While rarely saying "no" to anyone, insurance agents subtly pursue policies in the "preferred" (white) markets and discourage business in the "standard" (minority) markets.

NOTES

We greatly acknowledge the research assistance of Judy Treskow in the collection and preparation of the data. We also want to thank the Metropolitan Milwaukee Fair

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Housing Council for its assistance in collecting the data. Professor Karl Taeuber of the Center for Demography and Ecology at the University of Wisconsin provided valuable guidance in the analysis. And we want to thank the Urban Research Center and the Graduate School at the University of Wisconsin-Milwaukee for their support of this research.

1. John O. Calmore, “National Housing Policies and Black America: Trends, Issues, and Implications," in The State of Black America 1986, (New York: National Urban League, Inc., 1986).

2. The definition of redlining has proven to be a controversial issue. By insurance redlining we are referring to an insurer's practice or policy of refusing to sell an insurance product or varying the terms (e.g. price, coverage, terms of payment, inspection policy) under which a product will be sold because of the geographic location of a risk. While it is generally conceded by the industry and critics alike that residents in inner city, minority communities have greater difficulties obtaining insurance, there is much debate over the reason. The industry contends that its underwriting patterns reflect losses and risk exposure of different communities and, therefore, sound business practices. Critics argue that the industry operates on the basis of inaccurate perceptions of urban communities and, therefore, its practices constitute unfair discrimination against those areas.

3. Martin E. Sloane, “Federal Housing Policy and Equal Opportunity,” in U.S. Commission on Civil Rights, A Sheltered Crisis: The State of Fair Housing in the Eighties (Washington, D.C.: U.S. Government Printing Office, 1983) pp. 133-142.

4. Rose Helper, Racial Policies and Practices of Real Estate Brokers. (Minneapolis: University of Minnesota Press, 1969); Diana Pearce, “Gatekeepers and Homeseekers: Institutional Patterns in Racial Steering." Social Problems 26: (Feb. 1979): 325-42; Diana Pearce, "A Sheltered Crisis: The State of Fair Housing Opportunity in the Eighties," in U.S. Commission on Civil Rights, A Sheltered Crisis, pp. 143-155; William R. Tisdale, "Housing Discrimination: A New Technology," in U.S. Commission on Civil Rights, A Sheltered Crisis, pp. 156-161.

5. Ann Shlay, Where the Money Flows: Lending Patterns in the Washington, D.C., Maryland, Virginia SMSA, (Chicago: The Woodstock Institute, 1985); Calvin Bradford, "Financing Home Ownership: The Federal Role in Neighborhood Decline," Urban Affairs Quarterly 14 (March 1979): 313-36; Glenda Sloane, “Discrimination in Home Mortgage Financing," in U.S. Commission on Civil Rights, A Sheltered Crisis, pp. 83-89.

6. Carol Heimer, "The Racial and Organizational Origins of Insurance Redlining." The Journal of Intergroup Relations 10 (Fall 1982): 42-60; Federal Insurance Administration, Full Insurance Availability, (Washington, D.C.: U.S. Government Printing Office, 1974).

7. President's National Advisory Panel on Insurance in Riot Affected Areas, Meeting the Insurance Crisis of Our Cities, (Washington, D.C.: U.S. Government Printing Office, 1968); Midwestern Regional Advisory Committees to the U.S. Commission on Civil Rights, Insurance Redlining: Fact, Not Fiction, (Washington, D.C.: U.S. Government Printing Office, 1979).

8. Gerald M. Keenan, Insurance Redlining: Profits vs. Policyholders, (Chicago: National Training and Information Center, 1979). Rob Schachter, Insurance Redlining: Organizing to Win, (Chicago: National Training and Information Center, 1981).

9. Midwestern Regional Advisory Committees to the U.S. Commission on Civil Rights, Insurance Redlining: Fact, Not Fiction, pp. 3-22.

10. National Association of Insurance Commissioners Task Force and Advisory Committee on Urban Reinvestment, Final Report, (Milwaukee: National Association of Insurance Commissioners, 1982).

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11. State Farm Insurance Companies, A Report to the People: A Response to the Insurance Bureau's Proposal to Disrupt the Regular Insurance Market in Michigan, (Bloomington, IL: State Farm Insurance Companies, 1977); Advisory Committee to the NAIC Redlining Task Force, Ninety Day Report of the Advisory Committee to the NAIC Redlining Task Force, (Milwaukee: National Association of Insurance Commissioners, 1978); American Insurance Association, Insurance in Urban Areas: The American Insurance Association Addresses Property Insurance & Redlining, (New York: American Insurance Association, 1979).

12. Barbara Casey, Jacques Pezzier, and Carl Spetzler, The Role of Risk Classification in Property and Casualty Insurance: A Study of the Risk Assessment Process, (Menlo Park: Stanford Research Institute, 1976); Gelvin Stevenson, Fire Insurance: Its Nature and Dynamics, (Princeton: Fire Research Group, School of Architecture and Planning, Princeton University, 1978); Gregory D. Squires and William Velez, “Insurance Redlining and the Transformation of an Urban Metropolis," Urban Affairs Quarterly, 23 (September 1987): 63-83.

13. Carol Heimer, “The Racial and Organizational Origins of Insurance Redlining,”; Thomas C. Jones, Essential Insurance in Michigan: An Avoidable Crisis, (Lansing: Insurance Bureau, Michigan Department of Commerce, 1977); Carl Levin, Homeowners Insurance in Detroit: A Study of Redlining Practices and Discriminatory Rates, (Detroit: Office of the Detroit City Council President, 1976).

14. Robert Yaspan, "Property Insurance and the American Ghetto: A Study in Social Irresponsibility," Southern California Law Review 44 (Fall 1970): 218-274; David I. Badain, “Insurance Redlining and the Future of the Urban Core," Columbia Journal of Law and Social Problems 16, no. 1 (1980): 313-336.

15. Kevin J. Byrne, “Application of Title VIII to Insurance Redlining,” Northwestern University Law Review 75, no. 3 (1980): 472-505; Ruthanne DeWolfe, Gregory D. Squires, and Alan DeWolfe, “Civil Rights Implications of Insurance Redlining," DePaul Law Review 29, no. 2 (1980): 315-351.

16. Gregory D. Squires and William Velez, “Insurance Redlining and the Transformation of an Urban Metropolis."

17. Carla Wertheim, Milwaukee Metropolitan Fair Housing Council, personal interview, November 5, 1985.

18. Resource constraints limited the testing to three insurance companies. The companies selected were the three largest, in terms of the number of homeowners' policies sold in the Milwaukee area where the companies sell their products through their own sales representatives. They are also among the four largest companies in the community. Several major insurers sell their products through independent agents who represent several companies. Only companies using exclusive agents were selected, to insure that when teams contacted an agency, each tester would be soliciting information from the same company.

19. Diana Pearce, "A Sheltered Crisis: The State of Fair Housing Opportunity in the Eighties," p. 418.

20. William Sirola, Insurance Information Institute, personal interview, April 9, 1987.

21. Since this study was designed to provide a conservative measurement of discrimination by assigning testers from white areas with slightly less attractive characteristics in terms of their insurability, we have chosen a significance level of .10. Under this criterion all three comparisons are significant. In addition, we calculated and provided two additional measures: an index for size effect and a corresponding power value. In two of the comparisons, information on current policy and type of inspection requested, we obtained large scores for size effect (.80 and .70 respectively) as well as power values (99 and 80 respectively). These results strongly indicate that the racial