How Racial Discrimination in Homeowners Insurance Contributes to Systemic Racism and Redlining

What forms did Nationwide’s discrimination take? The company did the following:

· Nationwide used racial profiling to identify “target markets” that were white and excluded Black consumers

How can we stop racism in homeowners insurance? Here are several reforms that consumers should advocate for:

  1. State Insurance Departments should launch in-depth investigations of insurers if they hear complaints from homeowners.
  2. They should test premiums of various homeowners insurance policies in areas around their states, to get a better picture of the market and identify correlations between premiums and demographic make-up of communities. They should also use secret shopper tests to determine if applicants of color and white applicants are provided different company and coverage options or otherwise face different treatment.
  3. Departments should aggressively prosecute and punish company lawbreaking — fines should be substantial enough to deter repeat offenses and not just be a cost of doing business.
  4. States should ban the use of socioeconomic factors in insurance pricing, such as credit history.
  5. Companies should be required to demonstrate that the models they use in each segment of their business — marketing, underwriting, pricing, claims handling, and fraud fighting — do not have built in biases or disparate impacts.

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Consumer Federation of America

Consumer Federation of America

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Consumer Federation of America (CFA) is a non-profit organization advancing the consumer interest through research, advocacy, and education.