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USAA, Farm Bureau cited for discriminatory practices
Insurance Department criticized for inaction
(Press Release, April 30, 1997)
AUSTIN, TX -- Three of the largest automobile insurers in Texas – Nationwide, USAA and Farm Bureau – fare among the worst in making insurance available and affordable to low income and minority areas, according to a study released today by The Center for Economic Justice. State Farm and Safeco also have a lower market share of insured drivers in minority areas than they do in Anglo areas.
The study by the nonprofit group CEJ shows that drivers in poor and minority communities are disproportionately rejected by standard, lower-priced insurers, a practice known as "redlining." The analysis of individual company market data supplied by the Texas Department of Insurance complements a recent CEJ study of urban drivers placed in sub-standard – usually county mutual – companies.
D.J. Powers, attorney for the Center, called upon Texas Insurance Commissioner Elton Bomer to act decisively to put a halt to the practice, saying that the commissioner has "ample authority under the law to investigate and halt illegal marketing practices that disproportionately affect minority areas."
"The state requires all drivers to carry auto insurance, so it has a duty to protect consumers from unfair discrimination by insurers. Yet, the Department of Insurance has failed to take action against several large insurers who the Department knows are violating the law," Powers said.
The study urged the Department to enforce current laws that prohibit unfair discrimination, adopt new rules to prevent unfair discrimination, and use testers to catch insurers who discriminate against Texas drivers.
Following is a recap of the eight companies analyzed:
The earlier study by CEJ found Texans in poor and minority communities are being disproportionately rejected by standard insurers. Instead, the companies sell these customers coverage through a much higher priced substandard company (usually a county mutual company) or refer them to the Texas Automobile Insurance Plan Association (TAIPA), the state's residual auto insurance market.
The Center for Economic Justice is a Texas nonprofit corporation dedicated to protecting the interests of low-income consumers.