Major carrier worsens racial segregation with coverage denials, lawsuit alleges

Major carrier worsens racial segregation with coverage denials, lawsuit alleges | Insurance Business

Major carrier worsens racial segregation with coverage denials, lawsuit alleges
A leading national insurer stands accused of violating local and federal housing laws by allegedly refusing to insure buildings in which tenants pay rent with public vouchers, the Boston Globe reported Tuesday.

The National Fair Housing Alliance filed suit against Travelers Indemnity Co. this week, saying the company has consistently denied commercial building owners habitational insurance. Its refusal has made the lack of affordable housing in Washington, D.C. worse, and particularly affects African Americans, the suit argues.

“We are concerned about the pushing out of lower-income families from the city and the loss of affordable housing,” Shanna Smith, president of the National Fair Housing Alliance, told the Globe.
The suit comes following a 10-month investigation by the group in 2015 and 2016, in which the National Fair Housing Alliance sought to determine whether insurers were contributing to growing racial segregation in certain cities.

Staff with the group contacted six Travelers insurance brokers in order to obtain coverage for what it says were well-maintained buildings in poor, minority neighborhoods in which tenants use public housing vouchers. Coverage was denied, with brokers citing the vouchers as a problem, the suit says.

Without proper insurance, the plaintiffs argue that property owners are less likely to rent to voucher holders – who are disproportionately black. Those residents may find themselves faced with the choice of moving into low-quality buildings in other neighborhoods or leaving the city altogether.

The National Fair Housing Alliance said it has investigated four other insurance providers for similar behavior and is likely to file more lawsuits, though it declined to identify the other companies.

Even in instances in which coverage is extended, rates are much higher, the organization said, and come with fewer benefits.

“Travelers’ criteria have a disproportionate harm on neighborhoods statistically more likely to have rental buildings with tenants participating in the Housing Choice Voucher program, as landlords must go without property insurance, pay higher premiums for second market policies and receive fewer benefits and protections from those non-standard policies,” Smith explained.

The National Fair Housing Alliance says that these actions violate the federal Fair Housing Act as well as Washington’s Human Rights Act. Under the federal law, policies cannot impact some groups more than others and because housing subsidies are used predominately by African Americans, the organization says Travelers’ approach violates the Act.

The D.C. law, meanwhile, says a person cannot be discriminated against based on their source of income.

Travelers told the Globe that it does not comment on ongoing legal action, but the newspaper noted a similar complaint lodged against the company in 2013, in which plaintiffs alleged it did not renew insurance coverage after it found out some tenants in North Carolina buildings received housing subsidies. That case was eventually settled.

For now, the National Fair Housing Alliance says it will continue to investigate other insurance companies in other cities for similar violations.