Lexington FHC wins settlement from Nationwide

In March, the Lexington (KY) Fair Housing Council settled a suit against the Nationwide Insurance companies which alleged that Nationwide agents were engaged in a pattern or practice of racial discrimination in the sale of homeowners' insurance policies in Lexington. The suit named the Nationwide Mutual Insurance and Nationwide Mutual Fire Insurance Companies and employees of the Norris "Chigger" Flynn agency as defendants.

The terms of the insurance redlining settlement include:

  • A $440,000 fund to assist African-Americans with housing purchases and repairs. Neighborhood Housing Services of Louisville will administer the fund for five years and will provide low-interest loans to low and moderate income African-Americans in Lexington. Nationwide will receive a 5.5% annual rate of return on these loans.
  • The hiring of at least one new African-American insurance agent in Lexington. Currently, Nationwide has only one African-American agent in Kentucky. The agent's location in Lexington will not be based on the perceived racial identity of that location.
  • An insurance testing program for Lexington which will include testing Nationwide's agents for discriminatory practices and turning those results over to the Fair Housing Council.
  • An advertising and outreach program which expresses the need for replacement value homeowners' policies and the need for sufficient insurance. The program will be carried out in local African-American publications and on local radio and television programs oriented toward the African-American community in Lexington.
  • A new record-keeping system that will allow records inspection by the Fair Housing Council. The records will include new agents hired, education and outreach efforts, and test results.
  • A payment of $30,000 to the Fair Housing Council for its legal fees and costs.

The settlement adds Lexington to a national settlement reached in February 1997 between was for $13.2 million in housing investments in cities where Nationwide does business and

for policy changes including:

A policy that states Nationwide will not consider the age of a home when writing homeowners' insurance policies, nor will Nationwide decline insurance applications or give inferior homeowners' coverage based on the market value of the home;

A policy stating that Replacement Cost insurance will be an option for every house passing a home inspection;

Increasing Nationwide's presence in urban areas throughout the United States;

Training agents in fair housing laws; and

Conducting tests for racial discrimination by agents.

The Fair Housing Council filed the Lexington lawsuit on August 5, 1996, before Nationwide and the Justice Department announced the national settlement and widespread policy changes.

Settlement adds Lexington to list of cities to receive loan program

Fair Housing Council Executive Director and Attorney Galen Martin said, "The Council is especially glad to have Lexington and Nashville added to pattern settlements like those agreed to for the other cities around the country which include Louisville." Eight cities previously included in the settlement are Dallas, Chicago, Philadelphia, Baltimore, Louisville, Columbus, Toledo, and Cleveland. Nationwide may choose to spread the program to Richmond, Cincinnati, Pittsburgh, Atlanta, Charlotte, Memphis, and Indianapolis. Nationwide announced that it would include Louisville in the settlement in February 1997.

The Lexington lawsuit had originally been filed in Fayette Circuit Court but was removed to Federal District Court on Nationwide's motion. The case was based on the Lexington Fair Housing Council's insurance testing which revealed differential treatment of testers based upon their race or the perceived racial identity of the neighborhood where they said that they lived. The tests, conducted by the Council using Fair Housing Initiatives Program (FHIP) funds, showed:

African-American testers attempting to get homeowners' insurance quotes were treated poorly when compared with the treatment of white testers;

Nationwide also settled with Florida

In December 1997, Nationwide also settled a similar redlining complaint with the state of Florida's Insurance Commission. Nationwide agreed to pay $100,000 to the state after a Commission investigation yielded evidence of redlining.