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Worse Redliners Identified: Department of Insurance Fails
Nationwide is not on your side—if you live on the wrong side of town. Neither is USAA, Farm Bureau, State Farm or Safeco. Analysis of individual company market data supplied by the Texas Department of Insurance shows these companies are among the state’s worst redliners.
Yet, despite the clear evidence of redlining from the Department’s own data, the Texas Department of Insurance (TDI) has done little to address the problem.
This analysis complements the Center for Economic Justice’s recent study of urban drivers placed in sub-standard companies (usually county mutual companies) or assigned to the Texas Auto Insurance Plan Association (TAIPA), which showed that drivers in poor and minority communities were disproportionately rejected by standard (lower priced) insurers.
Now, CEJ examines the market share in Anglo and non-Anglo areas of the largest auto insurers in Texas. The study shows that five of those insurers —Nationwide, USAA, Farm Bureau, State Farm and Safeco—have a substantially smaller market share of insured drivers in minority communities than they do in Anglo communities.
Although the Texas Department of Insurance provided the data that establishes these companies as among the state’s worst redliners, the Department itself has done little to address unfair discrimination in the sale of auto insurance in Texas.
Analysis of individual company market data supplied by the Texas Department of Insurance shows that Nationwide, USAA, Farm Bureau, State Farm and Safeco are among the state's worst redliners. Yet, despite clear evidence of redlining from the Department's own data, TDI has done little to address the problem.
CEJ examines the market share in Anglo and non-Anglo areas of the largest auto insurers in Texas. The study shows that five of those insurers -- Nationwide, USAA, Farm Bureau, State Farm and Safeco -- have a substantially smaller market share of insured drivers in minority communities than they do in Anglo communities.
USAA writes far more than the statewide average in predominantly Anglo areas. The results are particularly striking in San Antonio where the company writes more than 25% of the insured vehicles in Anglo areas but less than 5% in minority areas.
The Farm Bureau's statewide results may be partially explained by their large rural market, where the non-Anglo population is lower. However, this company also controls a substantial urban market, and in urban areas Farm Bureau's market share also drops dramatically in minority zip codes.
Nationwide's homeowners insurance sales practices have been the subject of consumer complaints and federal redlining investigations for years. In predominantly Anglo areas of the state's largest cities Nationwide controls 3 to 6% of the market. In minority areas it covers less than 1.5% of the insured vehicles.
State Farm and Safeco also show significant marketshare declines in minority areas. On a statewide basis, State Farm's market share drops from 31% in Anglo areas to only 19% in non-Anglo areas. Safeco, with a far smaller share of the market as a whole, also drops to about half of its Anglo area market strength in non-Anglo areas.
The significant reduction in market share in minority neighborhoods for these five insurers contrasts with that of Geico. Geico's market share is as great or greater in minority communities as in Anglo areas.
Farmer's market share in high-minority communities is less than its market share in low-minority communities, but to a lesser extent than Nationwide, USAA, Farm Bureau, State Farm and Safeco. While Allstate shows strong standard market presence in minority communities, the company places more consumers in these areas in its higher-priced county mutual company. Statewide, Allstate markets and writes far more high-cost, non-standard insurance in high minority ZIP Codes than in low-minority ZIP Codes.