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Insurance Data Released
Saturday, March 13, 1999
Residents of low-income, minority neighborhoods were less than half as likely as other Californians to have homeowner and auto insurance in 1995, a new statewide report shows.
The report, which was released yesterday, follows three years of skirmishes between civil rights advocates and the state Department of Insurance, which fought efforts to make the data public.
Public Advocates, a San Francisco civil rights group, sued the Department of Insurance in 1996 after learning the agency had told the insurance industry it didn't need to submit ``redlining'' data as required by the law.
After losing the suit, Insurance Commissioner Chuck Quackenbush took three years to collect the data in part because some insurance companies were reluctant to surrender the information and had to be threatened with legal action to get them to comply.
The study focuses on ``underserved communities'' comprising 151 ZIP codes, including two in San Francisco (94102 and 94124), six in Oakland (94601, 94603, 94606, 94607, 94609 and 94621) and three in San Jose (95110, 95116 and 95122). Only statewide data was furnished in the report.
The report was confined to 1995. The insurance commissioner is expected to release reports for the next three years by the end of this year.
``Underserved'' is defined in the report as communities that are at least two-thirds minority, have low household incomes and above-average percentages of uninsured motorists.
Among the report's findings:
-- Six percent of auto liability policies are written in the target ZIP codes even though 13 percent of vehicles are there.
-- Six percent of homeowners policies are written in underserved communities, even though 16 percent of the state's population lives there.
-- Homeowners in target communities were three times as likely to have fire-only policies than full homeowners policies that include protections against theft and injury lawsuits.
-- Four percent of insurance agents are located in these neighborhoods.
-- Approximately 5 percent of mail solicitations went to underserved communities.
Civil rights advocates and legislators said the long-awaited numbers confirmed their suspicions.
``The numbers are appalling,'' said state Senator Jackie Speier, D-Fremont and chairwoman of the Senate Insurance Committee. ``There has been a concerted effort to hold back these numbers for years and no wonder. They show systematic redlining in this state that has to change.''
Among the major insurers scoring below average, when it came to auto policies, were State Farm, Safeco and National General. Although 13 percent of registered vehicles are owned by people living in the target communities, each company wrote just 4 percent of its policies there.
``It's a very competitive market,'' said State Farm spokesman Bill Sirola. ``We still wrote more policies than anyone else and we're aggressively marketing.
``But this is a very tough business. We'd like to grow more in California.''
Officials at the Department of Insurance said they'll be looking into the numbers to learn why they look so bad in some areas.
``Our next step will be to sit down with insurance companies and ask them some tough questions,'' said Deputy Insurance Commissioner Rex Frazier. ``What we have in this report is a red flag about problems.''
Industry observers criticized the report, saying it was dated. ``The study isn't realistic or relevant to today's marketplace,'' said Stephanie Saari of the Western Insurance Information Service, a trade group. ``It compares apples and oranges -- the 1995 marketplace and the 1999 marketplace.
``Today's marketplace is extremely competitive,'' she added. ``It's cutthroat. Companies are competing for high-risk drivers today.
Some consumer advocates, though, said the situation today is probably much the same as it was in 1995.
``Jackie Speier should call for an immediate hearing, and the Legislature should refuse to appropriate funds to the Department of Insurance unless they stamp out redlining as they're required to do under the law,'' said Bob Gnaizda, director of the Greenlining Institute in San Francisco, an anti-redlining organization.
Experts on both sides said the study raises a lot of questions. For example, it's unclear whether the apparent redlining suggested in the report is due to the unavailability of insurance or the fact that low-income residents can't afford it.
Some legislators have long held the belief that policies are priced high to discourage business in those areas. In a hearing on February 25, Speier introduced evidence showing a middle-aged male driver with a perfect driving record -- one of her staffers -- was quoted a price of $532 for Fireman's Fund auto insurance if he lived in San Mateo but a premium of $1,826 if he moved to low-income South Central Los Angeles.
``You can redline by making policies so expensive no one can afford them,'' said Speier.
Yesterday's release is bound to stimulate debate over how California insurance companies conduct their business. ``The important thing was to get something out there,'' said Mark Savage, the attorney for Public Advocates, which brought the suit resulting in the release of data.
SERVING THE UNDERSERVED
Selected insurance coverage in California according to information released by the state insurance commissioner
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