I
105TH CONGRESS
2D SESSION
H. R. 4145
To establish a program under the Secretary of Housing and Urban
Development to eliminate redlining in the insurance business.
IN THE HOUSE OF REPRESENTATIVES
JUNE 25, 1998
Mr. JACKSON of Illinois introduced the following bill; which was referred to
the Committee on Banking and Financial Services
A BILL
To establish a program under the Secretary of Housing
and Urban Development to eliminate redlining in the
insurance business.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Anti-Redlining Insur-
ance Disclosure Act of 1998’’.
SEC. 2. FINDINGS AND CONSTRUCTION.
(a) FINDINGS.—The Congress finds that—
(1) disparities in property and casualty insur-
ance coverage provided by insurers engaged in inter-
state commerce between areas of different incomes
and racial composition could adversely affect inter-
state commerce and the cost and availability of in-
surance for consumers;
(2) insurance companies are increasingly using
credit reports in their insurance underwriting prac-
tices;
(3) the use of credit reports to deny insurance
coverage to individuals and businesses in poor and
minority communities could adversely affect inter-
state commerce; and
(4) appropriate disclosures of information by in-
surers would benefit consumers and insurance regu-
lators.
(b) CONSTRUCTION.—Nothing in this Act is intended
to, nor shall it be construed to, encourage unsound under-
writing practices.
SEC. 3. MAINTENANCE OF INFORMATION AND PUBLIC DIS-
CLOSURE.
(a) GENERAL RULE.—
(1) DESIGNATED INSURERS.—
(A) IN GENERAL.—Except as provided by
subsection (b)(6), each designated insurer shall,
in accordance with subsection (b), annually
compile, submit to the Secretary, and make
available to the public for each calendar year
and for designated lines of insurance in a des-
ignated Metropolitan Statistical Area (referred
to in this Act as ‘‘MSA’’) for which the insurer
was designated under section 4(a)(2)—
(i) the total number of policies, total
exposure units (in car years and house
years), and total earned premium of insur-
ance policies by designated line which were
issued by such insurer, exposure units can-
celed, and the exposure units not renewed
by such insurer;
(ii) the total number of claims made
which, with respect to property insurance,
shall be disaggregated by the type and use
of the property insured, which types and
uses shall include—
(I) properties consisting of one to
4 dwelling units;
(II) properties consisting of more
than 4 dwelling units;
(III) owner occupied properties;
(IV) rental properties: and
(V) vacant properties;
(iii) disclose the standards and cri-
teria used in underwriting each designated
line of insurance; and
(iv) the number of licensed agents of
such insurer and the number within each
census track in such designated MSA,
whether such agent is an employee, inde-
pendent contractor working exclusively for
such insurer, or an independent contractor
appointed to represent such insurer on a
nonexclusive basis.
(B) SUBMISSIONS
AND
AVAILABILITY.—
The information described in subparagraph (A)
shall be—
(i) submitted to the Secretary in ac-
cordance with subsection (d); and
(ii) made available to the public, in
accordance with subsection (b)(2), for in-
spection and copying, at cost, at the home
office of the insurer and at a central de-
pository established under subsection (c),
by the Secretary.
(2) NONDESIGNATED
INSURERS.—Except as
provided in subsection (b)(6), every insurer which
sells an insurance policy in a designated line of in-
surance in a designated MSA, and which is not a
designated insurer in such MSA shall submit to the
Secretary for each calendar year in accordance with
subsection (d) and regulations of the Secretary the
total exposure units (in car years and house years)
of insurance policies in a designated line sold in such
MSA. With respect to such policies, the insurer shall
report the designated MSA where the insured risks
are located for which such insurance is issued and
within such MSA report the census track where the
risk is located.
(b) REQUIREMENTS.—
(1) CONTENT.—The information required to be
maintained and made available under subsection
(a)(1) shall be itemized in order to clearly and con-
spicuously disclose the policies, the exposure units,
and the premium amount for each line of insurance
for which information is required and be itemized by
the census track where the risks are located.
(2) AVAILABILITY TO THE PUBLIC.—The infor-
mation required to be maintained and made avail-
able under subsection (a) shall be made available to
the public on a timetable determined by the Sec-
retary but not later than October 1 of the calendar
year following the calendar year for which the infor-
mation is required to be made available, except that
such information shall not be made available to the
public until it is available in its entirety, but it shall
be made available if not all the information required
to be reported is available on such October 1 or on
the date determined by the Secretary.
(3) SPECIFICATION OF DATA.—
(A) IN GENERAL.—With respect to infor-
mation which is required to be maintained and
made available under subsection (a)(1), the Sec-
retary shall by regulation establish specifica-
tions for the collection and public reporting of
such information with respect to the following
lines of insurance: private passenger auto-
mobile, homeowners, dwelling fire and allied
lines, small business commercial, and surety
bonds. The specifications shall—
(i) provide that information be aggre-
gated among similar policyholders and re-
ported on that basis;
(ii) be designed to collect information
with respect to the availability, cost, and
type of insurance coverage between and
among various geographic areas;
(iii) detail what data elements should
be collected;
(iv) provide for the collection of infor-
mation on an individual insurer basis;
(v) minimize burdens on insurance
agents, including independent insurance
agents;
(vi) provide the data required by
clause (ii) with the least burden on insur-
ers, particularly small insurers;
(vii) take into account the types of
data collected under the Home Mortgage
Disclosure Act of 1975, such as gender,
racial and financial characteristics of appli-
cants for insurance and the reason for any
declines, 
cancellations, 
or 
nonrenewals
made for such insurance;
(viii) take into account existing statis-
tical reporting systems in the insurance in-
dustry;
(ix) require itemization by census
track; and
(x) include information on policies
written in a residual market.
(B) CONSULTATIONS.—In developing the
specifications in subparagraph (A), the Sec-
retary shall consult with—
(i) other Federal agencies with appro-
priate expertise;
(ii) State insurance regulators;
(iii) representatives of the insurance
industry, including statistical agents;
(iv) representatives of insurance pro-
ducers, including minority insurance pro-
ducers; and
(v) consumer, community, and civil
rights groups who are representative of a
diversity of geographic locations.
(C) EFFECTIVE
DATE.—The regulation
under subparagraph (A) shall be issued no later
than 270 days after the date of the enactment
of this Act.
(4) PERIOD OF MAINTENANCE.—Any informa-
tion required to be compiled and made available
under subsection (a)(1) shall be maintained and
made available for a period of 3 years after the close
of the first year during which such information is re-
quired to be maintained and made available.
(5) FORMAT
FOR
DISCLOSURES.—Subject to
subsection (c), the Secretary shall prescribe a stand-
ard format for making information available as re-
quired by subsection (a)(1). Such format shall en-
courage the submission of information in a form
readable by a computer.
(6) EXEMPTION.—
(A) SECRETARIAL
ACTION.—If the Sec-
retary determines that a State has enacted a
law, or otherwise implemented a requirement
under which—
(i) insurers operating in that State
are subject to disclosure requirements on a
census track basis substantially similar to
those of subsection (a);
(ii) there are adequate provisions for
enforcement; and
(iii) the information disclosed under
the State law or requirement is made avail-
able to the Secretary and the public in a
manner similar to other information dis-
closed under subsection (a)(1),
then the Secretary shall by regulation exempt
insurers operating in that State from complying
with the requirements of subsection (a)(1) with
respect to that State’s portions of the des-
ignated MSA’s. If the Secretary determines
that the State law or requirement no longer
meets the criteria of clauses (i) through (iii) or
is no longer in effect, the Secretary shall by
regulation revoke the exemption.
(B) UNITED
STATES
PROGRAM.—Report-
ing shall not be required under subsection (a)
with respect to insurance provided by a pro-
gram underwritten or administered by the
United States.
(c) PUBLIC ACCESS SYSTEM.—The Secretary shall
implement a system to facilitate public access to informa-
tion required to be made available to the public under sub-
section (a)(1). Such system shall include arrangements for
a central depository of information in each designated
MSA and for a telephone number which can be used by
the public, at cost, to request such information. State-
ments shall be made available to the public for inspection
and copying at such central depository of information for
all designated insurers within such MSA. The Secretary
shall also make copies of such statements available in
forms readable by widely used personal computers, such
as in disc format. The Secretary may charge a fee for such
information, which may not exceed the amount, deter-
mined by the Secretary, that is equal to the cost of repro-
ducing the information.
(d) SUBMISSION TO SECRETARY.—With respect to
the information required to be submitted under subsection
(a) to the Secretary, the Secretary shall develop regula-
tions prescribing the format and method for submitting
such information. Such regulations shall ensure uniform-
ity among insurers, to the extent practicable, in the format
used for reporting, including the definitions of data ele-
ments. Any reporting insurer may submit in writing to
the Secretary such additional data or explanations as it
deems relevant to the decision by such insurer to sell in-
surance.
SEC. 4. DESIGNATIONS.
(a) DESIGNATIONS BY THE SECRETARY.—
(1) DESIGNATIONS OF MSA’S.—The Secretary
shall designate the MSA’s for which reporting is re-
quired under section 3(a). At a minimum, the Sec-
retary shall designate the 50 MSA’s having the larg-
est population.
(2) DESIGNATION
OF
INSURERS.—For each
MSA designated under paragraph (1), the Secretary
shall take the following actions:
(A) The Secretary shall designate the in-
surers transacting insurance business in such
MSA for which reporting is required under sec-
tion 3(a). At a minimum, the Secretary shall
designate the 25 insurers in such MSA having
the largest premium volume in the designated
lines of insurance in each State in which such
MSA is located.
(B) In addition to the insurers designated
under subparagraph (A), the Secretary shall
also designate any entity primarily providing in-
surance in a designated line of insurance as
part of a residual market established by State
law.
(C) The Secretary shall also designate, in
addition to the insurers designated under sub-
paragraphs (A) and (B), insurers who specialize
in selling insurance in urban areas, including
surplus lines insurers.
(D) The Secretary shall also designate, in
addition to the insurers designated under sub-
paragraphs (A), (B), and (C) insurers such that
insurers representing at least 80 percent of the
premium volume in each State in which such
MSA is located in the designated line of insur-
ance are designated in such MSA. The Sec-
retary may not designate additional insurers
under this subparagraph if their market share
in the designated line of insurance in the appli-
cable States, as measured by premium volume
in each State in which such MSA is located, is
under 1 percent.
(E) In addition to the insurers designated
under subparagraph (A), (B), (C), and (D) the
Secretary may by regulation designate addi-
tional insurers in a MSA if the designation of
additional insurers is necessary to provide valid
data with respect to the availability, cost, and
type of insurance in the MSA.
(F) The Secretary shall revoke the des-
ignation of an insurer designated under sub-
paragraph (A) as follows: If such designated in-
surer has a market share in a designated line
of insurance in a MSA, as measured by pre-
mium volume in each State in which such MSA
is located, of under 1 percent, the Secretary
shall revoke the designation of such insurer be-
ginning with the insurer with the smallest mar-
ket share of such insurance if the remainder of
the designated insurers have a market share of
at least 75 percent of such insurance as meas-
ured by premium volume in each State in which
such MSA is located. In addition, the Secretary
may revoke the designation of any insurer des-
ignated under subparagraph (A) with a market
share in a designated line of insurance in a
MSA, as measured by premium volume in each
State in which such MSA is located, of under
1 percent if such designation has not been re-
voked under this subparagraph and if such in-
surer primarily sells insurance in rural areas of
such MSA.
(G) For purposes of this paragraph, insur-
ers which are affiliated or are members of the
same group shall be considered together as 1
insurer.
(3) DESIGNATION OF LINES OF INSURANCE.—
For each MSA designated under paragraph (1), the
following are the designated lines of property and
casualty insurance for which reporting is required
under section 3:
(A) Private passenger automobile insur-
ance.
(B) Homeowners insurance.
(C) Dwelling fire and allied lines of insur-
ance.
(D) Commercial insurance for small busi-
ness.
(E) Surety bonds.
The Secretary may designate additional lines of in-
surance on the basis of such criteria as the Sec-
retary may by rule develop. Such a rule shall be
issued in accordance with section 553 of title 5,
United States Code. For purposes of this Act, the
designation of a line of insurance includes a designa-
tion of a subline of class of insurance.
(4) TIMING OF DESIGNATIONS.—
(A) INITIAL
DESIGNATIONS.—The Sec-
retary shall make initial designations required
by paragraphs (1), (2), and (3) no later than
July 1 of the year preceding the first year for
which reporting is required under section 3.
Such initial designations shall be effective for 5
calendar years from the date of designation.
(B) SUBSEQUENT
DESIGNATIONS.—Not
later than July 1 of the year preceding the fifth
year after a designation under subparagraph
(A) or this subparagraph, the Secretary shall
make another designation to be effective upon
the expiration of such 5 years and such des-
ignation shall be effective for 5 calendar years
from the date of designation.
(C) NOTICE.—The Secretary shall notify
persons involved in the designations no later
than the July 15 which follows the designation.
(b) OBTAINING INFORMATION.—The Secretary may
obtain from insurers such information as the Secretary
may require to make designations under subsection (a).
SEC. 5. DISCLOSURES TO REJECTED APPLICANTS.
(a) IN GENERAL.—Except as provided in subsection
(e), the Secretary shall, by regulation issued under section
553 of title 5, United States Code—
(1) require insurers to provide to each applicant
for insurance in a designated line—
(A) reasons for denying an application for
such insurance or for canceling or not renewing
a policy in force; and
(B) actions the applicant may take to qual-
ify for such insurance; and
(2) restrict the use insurers may make of infor-
mation relating to—
(A) adverse underwriting decisions; or
(B) insurance coverage in a residential
market.
(b) MODEL ACTS.—In issuing regulations under sub-
section (a), the Secretary shall consider relevant portions
of model acts developed by the National Association of In-
surance Commissioners.
(c) ENFORCEMENT.—The Secretary may delegate to
the States the authority to enforce the requirements of
regulations issued under subsection (a).
(d) PREEMPTION.—Subsection (a) is not to be con-
strued to preempt any State from imposing on insurers
requirements of the type stated in such subsection, includ-
ing requirements which are more stringent or more com-
prehensive.
(e) EXEMPTION.—A regulation issued under sub-
section (a) may not apply to insurance provided under a
program underwritten or administered by the United
States.
(f) 
DEFINITION.—For 
purposes 
of 
subsection
(a)(2)(A), an adverse underwriting decision means any of
the following actions with respect to insurance trans-
actions involving insurance coverage which is individually
underwritten:
(1) A declination of insurance coverage.
(2) A termination of insurance coverage.
(3) Failure of an agent to apply for insurance
coverage with a specific insurance entity which the
agent represents and which is requested by the ap-
plicant.
(4) In the case of property or casualty insur-
ance coverage—
(A) place by an insurance entity or agent
of a risk with a residual market mechanism, an
unauthorized insurer, or an insurance entity
which specializes in substandard risks; or
(B) the charging of higher rates on the
basis of information which differs from that
which the applicant or policyholder furnished.
SEC. 6. TASK FORCE ON AGENCY APPOINTMENTS.
(a) ESTABLISHMENT.—Within 90 days of the date of
the enactment of this Act, the Secretary shall establish
a task force on insurance agency appointments. The task
force shall—
(1) consist of representatives of appropriate
Federal agencies, property and casualty insurance
agents, including specifically minority insurance
agents, property and casualty insurance companies,
State insurance regulators, and public interest
groups;
(2) have a significant representation from mi-
nority insurance agents; and
(3) be chaired by the Secretary or the Sec-
retary’s designee.
(b) FUNCTION.—The task force shall—
(1) review the problems inner city and minority
agents may have in receiving appointments to rep-
resent property and casualty insurance companies;
(2) review the practices of insurers in terminat-
ing agents and consider the effect such practices
have on the availability or cost of insurance, espe-
cially in underserved areas; and
(3) recommend solutions to improve the ability
of inner city and minority insurance agents to mar-
ket property and casualty insurance products, in-
cluding steps property and casualty insurance com-
panies should take to increase their appointments of
such agents.
(c) REPORT
AND TERMINATION.—The task force
shall report to the Committee on Banking and Financial
Services of the House of Representatives and the appro-
priate committee of the Senate its findings under para-
graphs (1) and (2) of subsection (b) and its recommenda-
tions under paragraph (3) of subsection (b) within 2 years
after the date of the enactment of this Act. The task force
shall terminate when the report is submitted to the com-
mittees.
SEC. 7. IMPLEMENTATION OF SECTION 3.
(a) REGULATIONS.—The Secretary shall promulgate
such regulations as may be necessary to carry out section
3. Such regulations may—
(1) contain such classifications, differentiations,
or other provisions; and
(2) provide for such adjustments and exceptions
for any class of transactions,
as in the judgment of the Secretary are necessary and
proper to effectuate the purposes of such section and to
prevent circumvention or evasion thereof or to facilitate
compliance therewith.
(b) DATA COLLECTION CONTRACTOR.—The Sec-
retary may contract with a data collection contractor to
carry out the Secretary’s responsibilities under section 3
if the contractor agrees to collect and make available the
data pursuant to the terms and conditions of such section.
A statistical agent may also be a data contractor.
(c) ROLE OF STATISTICAL AGENTS.—
(1) ACCEPTANCE
OF
DATA.—The Secretary
and, if applicable, the contractor under the sub-
section (b) contract may accept data reported under
section 3(a) by a statistical agent acting on behalf
of more than 1 insurer if—
(A) the statistical plan used by the statis-
tical agent for the reporting of data on insur-
ance provides for the reporting of data in a
manner compatible with section 3(a);
(B) the statistical agent reports such data
on an individual insurer basis, and, at the dis-
cretion of the Secretary, on an aggregate basis;
(C) the statistical agent provides adequate
procedures to protect the integrity of the data
reported;
(D) the statistical agent has procedures in
place which ensure that data reported under the
statistical plan in connection with reporting
under this Act and submitted to the Secretary
are not subject to adjustment by the statistical
agent or an insurer for reasons other than tech-
nical accuracy and conformance to the statis-
tical plan;
(E) the statistical agent ensures that the
data of 1 insurer is not subject to review by
other insurers before public availability; and
(F) the statistical agent provides for the
reporting of data in a manner compatible with
the format prescribed by the Secretary under
section 3(d).
(2) DISCONTINUANCE OF DATA ACCEPTANCE.—
The Secretary may, after providing an opportunity
for a hearing, discontinue accepting data reported
under section 3(a) by a statistical agent acting on
behalf of more than 1 insurer if the Secretary deter-
mines the requirements for acceptance of data in
paragraph (1) are no longer met.
(d) ROLE OF GAO.—The Comptroller General shall
have the authority to review and audit any data collection
and reporting performed under section 3, whether by the
Secretary, the contractor under the subsection (b) con-
tract, or a statistical agent, to ensure that the integrity
of the data collected and reported is protected.
(e) BURDENS ON INSURANCE AGENTS.—In prescrib-
ing regulations under this Act, the Secretary shall take
into consideration the administrative, paperwork, and
other burdens on insurance agents, including independent
insurance agents involved in complying with the require-
ments of this Act and shall minimize the burdens imposed
by such requirements with respect to such agents.
SEC. 8. RELATION TO STATE LAWS.
This Act does not annul, alter, affect, or exempt the
obligation of any insurer subject to this Act to comply with
the laws of any State or subdivision thereof with respect
to public disclosure and record keeping.
SEC. 9. COMPILATION OF AGGREGATE DATA.
(a) SCOPE OF DATA AND TABLES.—The Secretary
shall compile each year, for each designated MSA, data
aggregated by 5-digit zip code for all insurers who are sub-
ject to section 3 or who are exempt from section 3 under
subsection (b)(6)(A) of such section. The Secretary shall
also produce tables indicating, for each MSA, insurance
policies aggregated for various categories of 5-digit zip
codes grouped according to location, age of property, in-
come level, and racial characteristics of neighborhood.
(b) AGGREGATION
OF
INFORMATION.—Statistical
agents may aggregate the data of insurers that report to
them and may provide such information to the Secretary.
The Secretary may also provide the individual company
data submitted by insurers to statistical agents for aggre-
gation.
(c) AVAILABILITY TO PUBLIC.—The data compiled
and the tables produced pursuant to subsection (a) shall
be made available to the public on a timetable determined
by the Secretary but not later than October 1 of the year
following the calendar year on which the data and tables
are based.
SEC. 10. ENFORCEMENT.
(a) CIVIL PENALTIES.—Any insurer who is deter-
mined by the Secretary, after providing opportunity for
a hearing on the record, to have violated the requirements
of section 3 shall be subject to a civil penalty of not to
exceed $5,000 for each day during which such violation
continues.
(b) INJUNCTION.—The Secretary may bring an ac-
tion in an appropriate United States district court for ap-
propriate declaratory and injunctive relief against any in-
surer who violates the requirements of section 3.
(c) INSURER LIABILITY.—An insurer shall be respon-
sible under subsections (a) and (b) for any violation of
a statistical agent acting on behalf of the insurer.
SEC. 11. SUNSET.
(a) EXPIRATION.—Except as provided in subsection
(b), this Act shall not be in effect after the expiration of
5 years from its effective date. Prior to the expiration of
4 years from such date, the Secretary shall report to the
Banking and Financial Services Committee of the House
of Representatives and the appropriate committee of the
Senate—
(1) the quality of data received under section 3
and the effectiveness of the data requirement, in-
cluding the relation between the cost of such data
gathering and the benefits from having such data
available;
(2) the appropriateness of the geographic data
reporting units;
(3) the need for continued reporting by the des-
ignated insurers in urban areas;
(4) the efforts of insurers to meet the insurance
needs of minority and low-income neighborhoods;
and
(5) such other information as the Secretary de-
termines will assist in considering an extension of
this Act.
(b) EXTENSION.—Based on the Secretary’s report on
the need described in subsection (a)(3) and the informa-
tion described in subsection (a)(5), the Secretary may ex-
tend this Act for one period of 2 years.
SEC. 12. STUDIES.
(a) STUDY OF INFORMATION ON INSURANCE APPLI-
CANTS.—
(1) IN GENERAL.—The Secretary shall conduct
a study to determine the feasibility and utility of the
collection of information with respect to the charac-
teristics of applicants for insurance and reasons for
rejection of applicants. The study shall examine the
extent to which—
(A) oral applications or representations are
used by insurers and agents in making deter-
minations regarding whether or not to insure a
prospective insured;
(B) written applications are used by insur-
ers and agents in making determinations re-
garding whether or not to insure a prospective
insured;
(C) written applications are submitted
after the insurer or agent has already made a
determination to provide insurance to a pro-
spective insured or has determined that the pro-
spective insured is eligible for insurance; and
(D) prospective insureds are discouraged
from submitting applications for insurance
based, in whole or in part, on—
(i) the location of the risk to be in-
sured;
(ii) the race or ethnicity of the pro-
spective insured;
(iii) the racial or ethnic composition of
the neighborhood in which the risk to be
insured is located; and
(iv) in the case of residential property
insurance, the age and value of the risk to
be insured.
(2) REPORT.—The Secretary shall report the
results of the study under paragraph (1) to the
Committee on Banking and Financial Services of the