Group accuses Allstate of 'redlining' Insurer denies it discriminates

September 01, 1993|By Patricia Meisol | Patricia Meisol,Staff Writer

A community activist group representing low- and moderate-income homeowners in Baltimore charged yesterday that Allstate Insurance Co. is illegally discriminating against selected Baltimore neighborhoods and asked the state insurance commissioner to investigate.

"I personally called and was told I could not get insurance for a home [valued] under $40,000," said Nomia Crudup, the president of the East Baltimore chapter of the Association of Community Organizations for Reform Now (ACORN).

Allstate said the charges were unfounded, and state insurance regulators said their recent review of the company's policies turned up no evidence of "redlining."

In 1991, Allstate had 15.4 percent of the homeowner policies in Maryland, second to State Farm Insurance Co., according to A. M. Best, the insurance rating company. Of its statewide business last year, 13 percent of the company's homeowner policies were in Baltimore, Allstate said.

ACORN, based in Washington, said its members had surveyed 14 cities nationwide and found that Allstate engaged in a practice of redlining low-income and minority neighborhoods in violation of fair housing and insurance laws. Baltimore was not included in the official surveys, but Ms. Crudup said volunteers made about 25 telephone calls to test Allstate policies in the city and suburbs in the past two weeks.

In the survey, she said, volunteers discovered the company either would not sell in low-income neighborhoods or charged unaffordable prices. The group also said Allstate opened 52 offices in suburban parts of the state over the past five years, compared with none in the city.

J. Frank Nayden, associate insurance commissioner, said regulators found no evidence of redlining in an examination of Allstate policies three years ago or in a current update of that examination. In such reviews, regulators check to see whether companies evenly apply their own underwriting standards.

Mr. Nayden said he would not recommend another review. However, he said that, in response to the ACORN charges, he would check complaint files to see if any pattern emerged. Maryland law gives residents who are refused insurance or see their insurance canceled the right to a hearing.

Matthew Stegle, senior territorial manager for the Washington area, denied that the company discriminated. Allstate has underwriting standards to insure a home for replacement cost that could preclude insurance at some levels, he said. But the notion that it discriminated on the basis of income or neighborhood is incorrect, he said. "We don't discriminate against anybody. We are looking at the quality and maintenance of homes."

Allstate was one of the few companies to offer lower-cost insurance that covers the market value of a home rather than its replacement value, he said. "If the house is well-maintained and displays pride of ownership, we have a product we can offer those people."

He said having only one Allstate office in the city compared to 94 in the suburbs had little to do with how many policies it sells in the city. "You don't need to have a sales location on every corner. People don't buy insurance like that anymore," he said.

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