A consumer representative got a positive response from insurance regulators here when he urged them to create a model law requiring homeowners carriers to disclose data on the race, sex and income of those who try to buy coverage from them.
Greg Squires, a sociology professor at George Washington University, told National Underwriter his data call would cover “all homeowners applications, even where they are denied and business was not written. [That way] the data would reflect all applications and allow for analysis of approvals and declinations.”
Such detailed information is already required of home mortgage lenders under the federal Home Mortgage Disclosure Act (HMDA), noted Mr. Squires, who made his pitch to regulators last week at the National Association of Insurance Commissioners meeting in his first appearance as a funded consumer representative.
Montana Insurance Commissioner John Morrison, who chairs NAIC’s Market Regulation and Consumer Affairs Committee, told Mr. Squires his panel is “discussing this. We’re on top of this issue. It’s bright on our radar screen.”
He also agreed with Mr. Squires that the need for NAIC to have good, accurate data on such factors is “essential.”
Mr. Squires said the same kind of “sunshine” that federal law provides for the mortgage sector could also help regulators of the insurance industry.
The issue of transparency and data on insurance sales, Mr. Squires said, has taken on added importance in light of recent developments in the subprime mortgage market. He said this has spotlighted a greater need for transparency in the provision of all financial services.
HMDA, according to Mr. Squires, requires most mortgage lenders to disclose data on all applications—including race, gender and income of applicant, type and size of loan, and census tract.
According to his figures, HMDA and other fair-lending laws have increasingly given access to credit to low-income and minority markets. From 1993-2000, in fact, the share of bank credit to African-Americans increased from 3.8 percent to 6.6 percent, while the share to Hispanics rose from 4 percent to 6.9 percent.
Mr. Squires added that HMDA has helped lenders find new markets, assisted regulators in their efforts to monitor the market, and facilitated community group initiatives to form partnerships with both lenders and regulators.
Obtaining data on mortgages, he said, enhances understanding of patterns and permits an increase in fairness and efficiency in the home loan market. Such a “sunshine” law can similarly help the insurance industry, he added.