A Richmond, Va. fair housing agency and three individual plaintiffs have filed suit against Nationwide Mutual Ins. Co., alleging the homeowners insurer engaged in illegal racial discrimination in the Richmond metropolitan area.
The suit, Housing Opportunities Made Equal Inc. et al v. Nationwide et al, claims that Nationwide and seven Richmond-area Nationwide insurance agents redlined the city's minority areas, and seeks over $201 million in compensatory and punitive damages.
"Nationwide and its agents have intentionally, maliciously, wantonly, and oppressively engaged in discrimination in the provision of property insurance in African-American neighborhoods in the Richmond metropolitan area on the basis of race," the suit states.
A representative for Columbus, Ohio-based Nationwide, Lou Fabro, said "this issue in Richmond came as a complete surprise to us."
Company lawyers have looked over the complaint and have no comment on it at present, he said.
Nationwide will file an answer to the complaint in court, Mr. Fabro said, adding: "The company has a firm policy to make property insurance available to all applicants regardless of their race or ethnic makeup or the makeup of their neighborhood."
According to the suit, filed late last month in Richmond circuit court, between July 1995 and October 1996 the three individual plaintiffs--Donna Sully, Wanda Canada and Shelton Jones, all of whom are African-American--contacted Nationwide agents to obtain homeowners coverage for their homes located in African-American Richmond neighborhoods.
African-American testers also contacted Nationwide on the plaintiffs' behalf and white testers called about insuring comparable homes in White Richmond neighborhoods, the suit said.
The testing revealed, according to the suit, that Nationwide "does presently engage in sales methods and techniques which discourage persons in African-American neighborhoods from obtaining property insurance from Nationwide."
Nationwide offers superior coverage in white neighborhoods and does not employ practices--such as not returning phone calls, refusing to provide written quotes, quoting higher rates and referring applicants elsewhere--that it engages in in African-American neighborhoods, the suit states.
The suit assails Nationwide for rigorously applying underwriting guidelines such as a $60,000 value minimum and a 50-year age maximum on property in African-American neighborhoods, but only selectively in white neighborhoods.
These guidelines would have a disparate impact on those in African-American neighborhoods, even if applied uniformly, the suit states.
Other insurers, including State Farm and Allstate, have amended their underwriting practices following similar complaints.
In the past, Nationwide has said it is reviewing all of its underwriting guidelines. Mr. Fabro said changing some guidelines "is still under active consideration," but no announcements are imminent.
The alleged Nationwide transgressions violate both Virginia's fair housing and insurance statutes, the suit claims.
Housing Opportunities Made Equal claims in the suit that Nationwide's practices have frustrated its ability to eliminate discriminatory housing practices in the Richmond area.
The suit was filed on behalf of the plaintiffs by Timothy Kaine, with the Richmond law firm Mezzullo & McCandlish.
For Alleged Redlining In Virginia