ACORN teams with Prudential to eliminate insurance redlining in Philadelphia

After extensive fair housing testing in Philadelphia, the Association of Community Organizations for Reform Now (ACORN) identified several homeowners' insurance providers guilty of "redlining," or refusing to insure homes in low-income min ority communities. As a result of negotiations with Prudential Property and Casualty Company, any policies which may have contributed to redlining have been ended and a number of insurance products designed specifically for low-income urban homeowners are currently being marketed.

Prudential's new underwriting policies include: no minimum market value on properties (prior minimum market value of $50,000 has been eliminated), no exclusion for homes with flat roofs (which make up the majority of Philadelphia's urban housing), no requirement for credit reports, no mandatory ratio of market value to replacement cost, uniform statewide inspection requirements, and a willingness to ensure homes with vacant and abandoned buildings on the block. Prudential will place an insurance office and sales representative in the community to make access easier.

Prudential will also join with ACORN and provide a 20 percent discount off the standard rate for any member of ACORN's Home and Safety Program who participate in a safety seminar, a home-safety audit, and membership in ACORN's "Safe Block Program."

Philadelphia resident Laverne Butts, whose home burned down on March 27, 1996, told the Philadelphia Inquirer that she hopes the new plan will make it easier for people like her to get the right amount of insurance coverage. "We were insured, but not at the level we needed," Butts said. "Our house will be rebuilt, but there are many things we will never be able to replace. If you have no insurance or are underinsured, you are in great danger. We understand that now more than we ever did."

Karen Black, an attorney with the Public Interest Law Center of Philadelphia, told the Inquirer that many insurers do not want to write policies in older, urban neighborhoods. "The Fair Housing Action Center spent a number of weeks doing insurance testing, in which people would telephone agents requesting information about home owners' insurance," Black said. "We were hit with a litany of answers, including, `Let your fingers do the walking to find someone else,' or that the company did not insure homes with values less than $50,000 which pretty much rules out Philadelphia."

Bruce Dorpalen, an ACORN spokesman, added, "They'll say that they don't insure houses with flat roofs. Look around [Philadelphia]. That's all we have."

Studies completed last year by the National Fair Housing Alliance (NFHA), ACORN, and the National Association of Insurance Commissioners (NAIC) each found insurers refusing to write policies in low and moderate income urban areas. A family of three is defined as low to moderate income with incomes of $12,000 to $33,000 a year.

In a report issued in April, the Philadelphia Office of Housing and Community Development (OHCD) cited the difficulty in obtaining quality home owners' insurance as one of the key impediments to fair housing in Philadelphia. The ACORN/Prudential partnership will attempt to overcome that impediment.

OHCD director John Kromer told the Inquirer, "Low income and minority home buyers still face discrimination in the insurance industry due to the use of standard underwriting criteria that effectively exclude much of the housing stock in lower income neighborhoods." In other words, insurance companies discriminate and redline because it's part of their daily operations.