A national fair housing group is promising to monitor Northbrook-based Allstate Corp. closely to see if it lives up to reported changes in selling homeowner’s insurance policies that would affect inner-city and minority neighborhoods.
“We’ll keep testing all over the country,” said Shanna Smith, executive director of the National Fair Housing Alliance in Washington. “We’ll continue to investigate to see if they’re sincere and how their agents are being trained.”
Allstate on Wednesday confirmed reports that over the last few months it has quietly been changing guidelines that fair housing advocates say have had a discriminatory impact on minorities living in urban areas.
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The changes include removing restrictions that effectively barred coverage of homes valued at less than $40,000 or that were older than 40 years, and lifting a cap limiting replacement costs to 150 percent of the market value of a property, a limit that particularly affected low-value homes in high-cost areas.
The previous practice of excluding homes because of age or value will be replaced by more rigorous inspections for properties being considered for coverage, according to Allstate spokesman Al Orendorff. The stepped-up inspections will apply to all homes of “lesser value,” he said.
The Allstate shift comes after many years of pressure from fair housing groups who have claimed that redlining on homeowner’s insurance helped devastate inner-city neighborhoods by gutting property values, preventing damaged homes from being repaired, and discouraging people from rehabbing homes they couldn’t insure.
Last month, State Farm Mutual Automobile Insurance Co., the nation’s largest home and auto insurer, agreed to similar changes as part of a settlement of a redlining complaint filed in 1994 with the U.S. Department of Housing and Urban Development.
Smith, whose group was a party to the HUD complaint, said the new Allstate approach is probably due as much to a need to keep up with a major rival as to pressure from groups like hers. Allstate insures one of every eight homes in America.
On Aug. 1, the alliance asked U.S. Atty. Gen. Janet Reno for a Justice Department investigation of Allstate and Nationwide Insurance Co. “for their continued and pervasive redlining of African-American and Latino neighborhoods.”
Orendorff hotly denied the Allstate changes are a result of pressure from the alliance and called the redlining charges “politically motivated nonsense.” Allstate “is one of the largest” insurers of African-Americans and Hispanics in the U.S., he said.
The changes result from ongoing evaluations of the company’s underwriting guidelines and the needs of its customers, Orendorff said. A recently started program of opening inner-city offices has shown the company there is “good business, quality business” in those areas, he said.
That initiative, called the Neighborhood Partnership Program, forms ties with community groups and is operating in Chicago, Philadelphia, Dallas, Detroit, Washington, Houston and Cleveland, he said.
Aurie Pennick, president of the Leadership Council for Metropolitan Open Communities, Chicago’s oldest fair housing group, said a key question on the Allstate moves is how they are publicized.
“The procedures may have changed, but if they don’t let the people know through marketing, many people tend to say, `Why should I bother?’ ” she said.