[Federal Register Volume 59, Number 157 (Tuesday, August 16, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-20048]
[[Page Unknown]]
[Federal Register: August 16, 1994]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Office of the Assistant Secretary for Fair Housing and Equal
Opportunity
24 CFR Ch. I
[Docket No. R-94-1743; FR-3755-N-02]
(RIN 2529-AA73)
Discrimination in Property Insurance Under the Fair Housing Act;
Advance Notice of Proposed Rulemaking
AGENCY: Office of the Assistant Secretary for Fair Housing and Equal
Opportunity, HUD.
ACTION: Advance notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: HUD is charged with the administration and enforcement of the
Fair Housing Act (the Act), including the promulgation of regulations
under the Act. This notice announces HUD's intention (1) to publish
regulations concerning nondiscrimination in property insurance
practices under the Fair Housing Act, and (2) to solicit public comment
on this subject prior to publication of a proposed rule. Issues for
which HUD specifically requests comment from the public are set forth
in the Supplementary Information section of this notice.
DATES: Comment Due Date: October 17, 1994.
FOR FURTHER INFORMATION CONTACT: Peter Kaplan, Director, Office of
Regulatory Initiatives and Federal Coordination, Office of Fair Housing
and Equal Opportunity, HUD, Room 5240, 451 Seventh Street SW.,
Washington DC 20410-0500, telephone (202) 708-2904 (not a toll free
number). The toll free TDD number is 1-800-877-8339.
ADDRESSES: Interested persons are invited to submit comments in
response to this notice to the Rules Docket Clerk, Office of the
General Counsel, Room 10276, Department of Housing and Urban
Development, 451 Seventh Street, SW, Washington, DC 20410-0500.
Comments should refer to the above docket number and title. A copy of
each comment submitted will be available for public inspection during
regular business hours at the above address. Facsimile (FAX) comments
are not acceptable.
SUPPLEMENTARY INFORMATION:
I. Background
The Department of Housing and Urban Development (HUD) is committed
to initiatives that will provide access to capital and economic
empowerment for all Americans. HUD has launched several programs to
stem disinvestment in cities and disadvantaged communities throughout
the country, increase the flow of capital into these communities, and
create communities of opportunity throughout the nation.
Among HUD's priorities are: (1) Empowerment of local communities by
supporting local economic development efforts; (2) expansion of housing
opportunities through partnerships with state and local government and
private developers and financial institutions; and (3) opening housing
markets through vigorous enforcement of the Fair Housing Act (42 U.S.C.
3601-3619). A critical component of these initiatives is assuring
access to capital for homeownership and business development. Assuring
fair access to property or hazard insurance is essential to achieve
each of these objectives. Insurance is necessary for access to capital.
HUD is charged with the administration and enforcement of the Act,
including the promulgation of regulations under the Act. HUD is also
responsible for receiving and investigating complaints alleging
discriminatory practices under the Act and bringing enforcement actions
where the Department determines that reasonable cause exists to believe
that a violation has occurred or is about to occur. As part of these
initiatives, and in furtherance of its responsibilities under the Act,
HUD announces its intent to issue regulations concerning property
insurance practices that are discriminatory under the Act.
As indicated in HUD's current regulations, discriminatory housing
practices include ``refusing to provide * * * property or hazard
insurance * * * or providing such * * * insurance differently because
of race, color, religion, sex, handicap, familial status, or national
origin.'' 24 CFR 100.70(d)(4). Case precedents such as Dunn v.
Midwestern Indemnity Mid-American Fire & Casualty Co., 472 F. Supp.
1106 (S.D. Ohio 1979) and McDiarmid v. Economy Fire & Casualty Co., 604
F. Supp. 105 (S.D. Ohio 1984) established the applicability of the Act
to discriminatory insurance practices. But see Mackey v. Nationwide
Insurance Co., 724 F. 2d 419 (4th Cir. 1984). More recent precedents,
N.A.A.C.P. v. American Family Mutual Insurance Co., 978 F.2d 287 (7th
Cir. 1992), cert. denied, 113 S. Ct. 2335 (1993) and Nationwide Mutual
Insurance Co. v. Cisneros, No. C3-92-52 (S.D. Ohio Feb. 24, 1994),
reaffirmed this principle, according deference, under standards
established in Chevron U.S.A., Inc. v. Natural Resources Defense
Council, 467 U.S. 837 (1984), to HUD's substantive regulation
promulgated in 1989.
II. Solicitation of Public Comments
HUD is requesting public comment in several areas to be addressed
by the regulation. There are several complex issues to be addressed by
this regulation. In developing this regulation, HUD will work closely
with insurance companies, trade associations, State regulators, civil
rights groups and community organizations to ensure that HUD has heard
as many viewpoints as possible on the subject of property insurance
practices. HUD already has begun informal discussions with
representatives of these entities, organizations and individuals to
learn more about their views on current property insurance practices
and about issues that HUD should address in the regulation. These
contacts will continue in the form of group meetings and informal
discussions with insurance companies, advocacy groups and trade
associations.
In addition, HUD will hold several public meetings around the
country for industry groups, advocacy groups and private citizens to
submit comments and discuss what the regulation should address.
Based on the comments that HUD receives in response to this notice
and comments presented at the public meetings, as well as any written
guidance received from additional communications with industry groups
and others, HUD will publish a proposed rule. Following careful
consideration of the comments received on the proposed rule, HUD will
issue a final regulation.
HUD is considering the issues and areas that the regulation should
address in order for the regulation: (1) to be effective as guidance to
HUD investigators, state and local civil rights agencies and private
fair housing groups; (2) to serve as a guidepost for preventive acts by
the industry; and (3) to be a clear description of the rights afforded
protected classes. To do so, the regulation will address specific
practices that are prohibited under the Act, describe the standards to
be utilized in determining whether violations of the Act have occurred,
and discuss investigative techniques that will be utilized, remedies
that will be sought where violations are found, and voluntary
affirmative efforts that are appropriate to eliminate discrimination.
The standards for determining discrimination in this area are those
utilized in all other areas covered by the Act. Specific practices that
violate the Act will be identified and the factual circumstances for
identifying violations will be defined. The rule will describe the
investigative techniques HUD will utilize, including those HUD employs
in current fair housing complaint investigations. The rule will
identify remedies to be considered that are appropriate to insurance
cases.
The areas for which HUD specifically requests comment from the
public are the following:
1. Underwriting practices that may discriminate due to either
disparate treatment or disparate impact.
2. Sales and marketing practices that may discriminate due to
either disparate treatment or disparate impact.
3. Explanations or justifications for those industry practices that
could be challenged as violations of the Act because of disparate
treatment or disparate impact. In cases of disparate impact,
explanations should address the business necessity for the practice and
why no less discriminatory alternative exists.
4. Barriers to the availability of insurance, or barriers to equal
terms and conditions of insurance, for particular protected classes.
5. Entities and individuals who should be covered by the
prohibition against discriminatory insurance practices, such as mutual
and stock companies, independent agents, direct writers, exclusive
agents, and rating services.
6. Techniques HUD should use in complaint investigations.
7. Remedies HUD should consider to discourage discriminatory
practices, including equitable, injunctive, and affirmative relief,
monetary damages, and civil penalties.
8. Voluntary actions insurers can take to assure nondiscrimination
and to increase availability of insurance to allow access to capital.
9. Other issues that are relevant to the issue of insurance
discrimination.
In addition to comments, HUD is also requesting any reports,
documents, or other evidence that will assist the Department in
evaluating issues to be addressed in the regulation.
HUD requests that, in submitting comments on any of the foregoing
issues, the commenter please cite the item number of the issue
addressed by the comment. HUD also welcomes comments on issues related
to insurance practices that are not specifically included in the items
listed.
Dated: August 10, 1994.
Roberta Achtenberg,
Assistant Secretary for Fair Housing and Equal Opportunity.
[FR Doc. 94-20048 Filed 8-15-94; 8:45 am]
BILLING CODE 4210-28-P
