Racial Profiling, Insurance Style: Insurance Redlining and the Uneven Development of Metropolitan Areas

Racial profiling has emerged as a highly contentious practice in a range of social settings. This article examines the role of racial profiling in the property insurance industry and how such practices, grounded in negative racial stereotyping, have contributed to racial segregation and uneven metropolitan development. From a review of industry underwriting and marketing materials, court documents, and research by government agencies, industry and community groups, and academics, it is clear that race has long affected and continues to affect the policies and practices of this industry. Due to limitations in publicly available data, it is difficult to assess precisely the extent to which race shapes industry practices. Research and public policy initiatives are explored that can ameliorate the data problems, increase access to insurance, and foster more equitable community development. ‘‘ Very honestly, I think you write too many blacks . . . you got to sell good, solid premium paying white people. . . . the white works’’ Sales manager for American Family Mutual Insurance Company (NAACP v. American Family Mutual Insurance Company, 1992). Racial profiling has emerged as a leading civil rights issue in social science research and policy circles today. If most of the debate over racial profiling focuses on policing and administration of justice issues, such practices are not restricted to this arena. In fact, at least financially and economically, far more damage is done by racial profiling in other areas of public and private life. One of those is the property insurance industry. The costs include not just diminished opportunities for racial minorities, but also the exacerbation of uneven development of metropolitan areas, and the many costs associated with that pattern. This article examines the historical and ongoing practices of racial profiling and related discriminatory actions on the part of the property insurance industry in the US. These practices are hardly unique to any particular industry. In fact, they reflect longstanding racial stereotypes *Direct correspondence to: Gregory D. Squires, Department of Sociology, 801 22nd Street NW, Phillips Hall, Suite 409, George Washington University, Washington, DC 20052. E-mail: [email protected] JOURNAL OF URBAN AFFAIRS, Volume 25, Number 4, pages 391–410. Copyright # 2003 Urban Affairs Association All rights of reproduction in any form reserved.