After the success of its banking campaigns and partnerships, ACORN was eager to replicate the tactics and results with homeowners insurance companies. ACORN had long known that when trying to buy a home, access to homeowners insurance was as important as getting a mortgage approved. Moreover, members continued to have personal and distinctly unpleasant experience with homeowners insurers. While ACORN had addressed the issue at the state level with some success, in 1992 the organization launched a national campaign to put an end to homeowners insurance redlining.

The national campaign employed a variety of approaches. It used cutting edge research to expose the problem and document the need for anti-redlining legislation. It educated legislators at the state and national levels, as well as insurance regulators and their trade association, the National Association of Insurance Commissioners, about the issue. It pressed HUD to bring fair housing cases against individual companies. And, while it took the redliners to task for their discriminatory policies, the campaign also devised a carrot and stick approach to resolving the issue. ACORN developed a proposal for a Neighborhood and Home Safety Program that would establish a partnership between ACORN and insurers similar to its loan counseling partnership with the banks.

The opening salvo of the campaign was the 14-city survey described earlier. The study demonstrated the prevalence and magnitude of the problem, and it drew a high volume of media coverage. The next step was to target the redliners directly and ACORN sought a poster child for the campaign.

The Real Allstate: Some state, No city

ACORN wanted a target which exemplified the callous disregard for inner city neighborhoods it had grown to expect from insurers. Allstate fit the bill. The Allstate Insurance Company was representative of the industry’s unwillingness to remain in urban areas, particularly minority areas. It began as a neighborhood insurer, a subsidiary of the omnipresent Sears retail stores, but as Sears migrated to the suburbs, Allstate followed.

An ACORN study found that between 1987 and 1993, Allstate opened a net of 98 new offices in 13 cities but it opened 468 new suburban offices —nearly 5 times as much growth in suburban America as in the urban centers. In the 16 cities studied, ACORN found that 82.6% of the Allstate offices were in the suburbs. In Los Angeles, Allstate management ordered agents to close offices and cease advertising auto insurance in certain urban and minority communities. It was management policy to deliberately delay processing minority applications in the hope that they would seek insurance elsewhere.

In some states, Allstate attempted to pull out altogether. In Louisiana, it stopped writing policies in coastal areas. In Florida, after hurricane Andrew, Allstate decided to non-renew 300,000 homes; for the policies it did not phase out, premiums rose 40%. When regulators tried to crack down on Allstate in Massachusetts, it pulled out of the market altogether, leaving thousands without coverage, some of whom could not find other carriers. Allstate tried the same gambit in New Jersey after the state enacted anti-redlining reforms; the state threatened to levy a heavy fine and Allstate backed down. New Jersey’s insurance commissioner subsequently required Allstate to write an additional 200 policies to remedy Allstate’s poor performance in low-income urban areas.

Allstate also has engaged in “risk-based” redlining. An anonymous Allstate agent supplied ACORN with underwriting changes for Long Island, New York, which zeroed out some towns for insurance and limited others to Allstate Indemnity product, a higher priced policy to allegedly cover the risk. Elsewhere, Allstate’s pricing policies for low-income areas essentially precluded applicants from purchasing policies. In Atlanta, premium rates for low-income areas were $8.80 for every $1,000 worth of coverage—nearly three times higher than for upper-income areas. In Dallas, it was three and a half times as expensive in lower-income areas. In several cities, Allstate would not cover property worth less than between $30,000 and $55,000, an extremely high figure that excluded large shares of the housing market.

Allstate agreed to meet with ACORN after the study was released to come to terms with their differences. ACORN proposed a program of community and neighborhood safety trainings and examinations which could be performed in exchange for lower premium rates. When Allstate refused to negotiate, ACORN took to the streets to protest the company’s discriminatory underwriting practices. In fourteen cities, ACORN held simultaneous sit-ins and picket lines at Allstate offices. ACORN demanded that Allstate enter into the safety program with ACORN and/or divulge its underwriting criteria.

Congressional Counteroffensive

While ACORN was attacking insurers in the media and in the streets, it also was working with House Democrats to craft a legislative remedy to underwriting discrimination. Rep. Joseph Kennedy (D-MA) sponsored an anti-insurance redlining bill which was drafted by ACORN. Fearing the Kennedy bill would pass, industry groups wrote a weaker measure which was sponsored by Rep. Cardiss Collins (D-IL) in the Commerce Committee. The Collins bill required disclosure of underwriting business volume by each company for each zip code in the nation’s 25 largest cities, including policies, cancellations, non renewals and active agents. The Kennedy bill disclosed by census tract, like HMDA, the number of policies, the premiums paid, cancellations and non-renewals, as well as claims paid. ACORN testified for and endorsed both bills but felt the Kennedy bill superior because of the tougher disclosure requirements.

In 15 states, ACORN held Community Forums on Insurance Redlining with state insurance commissioners, drawing more than 1,000 people. At the forums, members testified how insurance discrimination had personally affected them, requested investigations into local redlining, and demanded support for the federal anti-redlining bills. For many of the state commissioners, this was the first time they heard the personal impact homeowners insurance redlining had on individuals. ACORN asked the more progressive of the state insurance commissioners to try and pressure the NAIC to study insurance redlining.

In the summer of 1993, 400 members marched on the annual NAIC meeting protesting insurance redlining and demanding state action. It asked for disclosure and description of the upcoming NAIC study on redlining, a role for low-income and minority consumers in NAIC, funding to conduct testing, and a vote by commissioners on federal anti-redlining legislation. The incoming NAIC president committed publicly to meet the first two demands and said he would consider the third. Thousands of industry lobbyists were shocked by the audacity of ACORN’s action, but it got results.

Later the same summer, ACORN hosted its first Insurance Redlining Roundtable. Community groups, state and federal regulators, and academics were gathered by ACORN to discuss the epidemic of homeowners insurance redlining and possible solutions, especially the bills slowly working their way through Congress. The highlight was HUD’s Secretary of Fair Housing stating that homeowners insurance bias would be one of her top three priorities. Participants shared ideas and insights on fighting insurance bias from the state houses to the courts to the ballot boxes.

Focus on Partnerships

Meanwhile, ACORN Housing Corporation was working out the details of the Neighborhood and Home Safety Program. It combined grass roots organizing with practical approaches for reducing the losses that made insurers reluctant to write traditional policies. The program includes neighborhood watches, property marking, home safety inspections and the installation of home safety and protection devices likes smoke alarms and dead-bolts. The goal was to reduce losses through educational programs and local neighborhood organizing in exchange for negotiating lower rates from insurers.

In July of 1994, ACORN invited insurers to a national Insurance Summit in Chicago where the Neighborhood and Home Safety Program was presented. The keynote speaker at the Summit was HUD Secretary Henry Cisneros, who lauded ACORN’s efforts and pledged to investigate violations of the Fair Housing Act by insurers. Summit participants included the eight largest companies which write over 40% of the country’s homeowners insurance. They took a tour of a typical ACORN neighborhood and attended a session explaining the benefits and success of neighborhood organizing and programs. After the summit, ACORN entered into negotiations with a number of the participating insurers to put the Neighborhood and Home Safety program into effect.

Later that year, the insurance redlining legislation died towards the end of the 103rd Congress. In a turf war between the Banking Committee, where Kennedy’s bill advanced, and the Commerce Committee, where Collins’ bill moved, the bills stalled on the House floor. Then Commerce Committee Chairman Dingel (D-MI) held the stronger Kennedy bill at bay. Collins’ bill passed but only after the collection of racial and gender data was stripped out of the disclosure requirements. Though the legislation died, the insurance campaign brought about important partnerships with several companies.

Making a Deal with Prudential

In Philadelphia, ACORN targeted Prudential because members identified it as company that was not serving their neighborhoods. A phone survey of Prudential agents confirmed their suspicions. They found, first of all, that the company actually had no agents in minority or lower-income neighborhoods. Callers were unable to obtain quotes for any city property, only suburban homes. The minimum home value for coverage was higher than the average for city homes; some agents set the minimum at $75,000. Prudential also refused to write policies on homes which did not have peaked roofs, when most of the housing in Philadelphia is flat roofed.

After the survey results were tabulated ACORN held a press conference to publicize Prudential’s poor performance in low-income and minority communities, and threatened to file suit against the company. Though insurers are not bound by CRA or HMDA, practices which have the effect of denying housing based on race are prohibited under the Fair Housing Act. The adverse publicity and the threat of the suit forced Prudential to the negotiating table.

The agreement with Prudential is ground breaking. It was inaugurated in May of 1996, and is the first community group-insurance partnership in the country. The Prudential Pilot Program for Homeowners Insurance eases underwriting standards, offers full value replacement policies, and a 20% discount to ACORN members who participate.

The program is simple. AHC conducts neighborhood and home safety seminars which educate homeowners on the risks of fire, theft, water damage, and liability exposure and how to reduce those risks easily and cost effectively. Every property needs to have a home safety audit to join the program. The audits verify that there are smoke alarms, deadbolts, and an absence of safety hazards and water damage. Additionally, membership in ACORN provides a network of community based risk reduction strategies like fighting crime and cleaning up neighborhoods.

For its part, Prudential provides affordable, comprehensive coverage—something which had become nearly extinct in Philadelphia. The policy is a standard replacement value policy, covering everything except flood, earthquake, war and nuclear accident. Limits on minimum home value, flat roofed buildings, and property age have been eliminated. Eligibility is not limited by credit reports or employment histories. To date, the agreement has secured 300 policies worth $15 million.

Allstate entered a different relationship with ACORN. In 1994, the company agreed to invest $10 million in a partnership with ACORN, NationsBank and Fannie Mae to provide below-market interest rate mortgages to low-income homebuyers.

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