Financial Reform Bill Includes Provision Addressing Insurance Redlining
Although garnering relatively little attention to date, included in the Dodd-Frank Financial Reform bill is a provision (Section 502) creating the "Federal Insurance Office" (FIO). The FIO is charged with, among other things, "monitor[ing] the extent to which traditionally underserved communities and consumers, minorities, and low- and moderate-income persons have access to affordable insurance products regarding all lines of insurance..." The FIO has authority to "receive and collect data and information on and from the insurance industry and insurers" and to "analyze and disseminate data and information." This data review component offers federal regulators an opportunity to analyze the information for potential insurance redlining similar to agency review of Home Mortgage Disclosure Act (HMDA) data for lending discrimination. Federal agencies (and class action plaintiffs' attorneys) have for many years used HMDA to support investigations and lawsuits against lenders. The creation of the FIO and the data review process may lead to similar results.
As professor Gregory D. Squires recently wrote in comparing the FIO's data review function to banking agency review of HMDA:
This is the time for the federal government to finally collect from the insurance industry the kind of information it has long collected from mortgage lenders under the Home Mortgage Disclosure Act (HMDA). For more than three decades the Feds have collected information on the number and types of home loans most mortgage lenders have made in the nation's metropolitan areas along with the census tract or neighborhood in which the homes were located. HMDA has been modified so now lenders are required to disclose the race, gender, and income of all applicants, whether their application was approved or denied, and for certain high cost loans the interest rate on those loans.
