Insurance brokers sue over discrimination

Insurance brokers sue over discrimination | Insurance Business

Insurance brokers sue over discrimination

Three insurance brokers in Baltimore, MD have filed complaints with the state regulator over allegations that an insurance company is discriminating against the predominantly Black neighborhoods in the city.

All three brokerages – Baltimore Insurance Network, Ross Insurance Agency, and Welsch Insurance Group – have accused Erie Insurance of engaging in insurance “redlining” of Black customers. Each of the brokerage firms filed separate complaints with the Maryland Insurance Administration this week, Baltimore Sun reported.

The three brokerages contract or have contracted with Erie to serve as insurance agents in the city. Two of the three brokerages are also Black-owned businesses.

Redlining refers to the practice of denying services to residents of particular neighborhoods based on race or ethnicity. The complaints by the brokerages accuse Erie of refusing to underwriter policies based on a potential client’s race, ethnic origin, neighborhood and/or socioeconomic status.

Baltimore Insurance and Welsch even specified in their complaints that Erie Insurance urged them not to sell any policies to people in Baltimore with “city sounding names.”

The complaint by Baltimore Insurance Network added that it was advised by an Erie branch manager to “place those people elsewhere, I don’t care where, just not with Erie. They don’t fit Erie’s appetite. Find better people.”

That branch manager also told the brokerage that it was “devaluing the brand” by writing insurance policies for people in predominantly African American neighborhoods. Baltimore Insurance also said that it was instructed to reduce its sales by 30%, by rejecting qualified applicants in mostly Black inner-city neighborhoods, and that Erie required the brokerage to only include criminal record checks with applications in lower-income neighborhoods.

“Erie Insurance brokerages that serve Baltimore, and in particular that serve the poor areas of Baltimore which are predominately African American, are being told that even when customers meet their underwriting standards and when they would otherwise qualify, Erie is not interested in certain customers,” said Cary J. Hansel, an attorney representing Baltimore Insurance.

According to Hansel, his clients objected to what they claim are unethical practices, and even said that they faced retaliation if they did not comply. The brokerages said that Erie penalized them for not following their instructions, such as through reducing commissions and other compensation, limiting clients referrals, and even terminating contracts in two cases.

A spokesperson for Erie Insurance said that the company has not yet been formally notified of the filings, but will address any complaints with the insurance regulator.