Jury Says Nationwide

Redlined In Richmond

A Richmond, Va., Circuit Court last week sent shock waves through the insurance industry, ruling that Nationwide was redlining in the city, avoiding neighborhoods with high concentrations of African-Americans.

The jury in the case of Housing Opportunities Made Equal v. Nationwide Insurance Companies awarded $500,000 in compensatory damages to HOME-a private fair housing organization based in Richmond-and penalized Nationwide with $100 million in punitive damages.

Nationwide said it plans to appeal the ruling. "From the time the suit was filed, Nationwide has maintained that the plaintiff's allegations were unfounded," said John Millen, national media relations manager for Columbus, Ohio-based Nationwide.

"The plaintiffs have not presented any factual evidence to support their claims against Nationwide," he said. "Instead, they swayed the jury by relying on insinuations and emotionally charged allegations which have no place in a court of law."

Documents used by Nationwide categorized residents in Richmond-area ZIP codes in derogatory ways, the plaintiffs charged. According to the documents, residents in one ZIP code were "Difficult Times-Black Urbanite households with many children...they do watch situation comedies and read T.V. Guide."

Attorney Arch Wallace, a partner at Richmond-based Sands, Anderson, Marks & Miller who represented Nationwide, admits that sentence was in Nationwide-owned documents. However, he added, they were not written by Nationwide and the language was actually rejected by the insurer.

"Nationwide subscribes to 10 to 12 different services..." he said. "They do credit reports and their documents tell you the population of a ZIP code along with how much it has grown since the last census, how much they make and how far they drive to work. When you take a 90-page document and take out a sound bite, it will sound very bad. And in this case, it isn't even Nationwide terms. It's terms Nationwide rejects."

Mr. Wallace said Nationwide uses such services because the insurance company is trying to target areas where growth is fastest and this service, along with others, helps them determine which ZIP codes had growth and which ZIP codes did not.

HOME said it conducted a series of 15 matched-pair tests of Nationwide. In those tests, volunteers called agents and asked for quotes for homeowners insurance. White testers called about homes in white neighborhoods, while black testers called about similar homes in black neighborhoods.

In seven cases only the white tester was able to obtain a quote, HOME said. Only one time in 15 did the black tester receive a quote when a white tester did not, the agency said.

This is more proof of racism on Nationwide's part, according to HOME Executive Director Constance Chamberlin. The jury agreed, but Mr. Wallace contests this.

"That's not totally true. The test was flawed for many reasons," according to Mr. Wallace. "One, the homes were supposed to be of the same size and value; they were not. [HOME] also knew that if a home is more than 50 years old, Nationwide would have a third-party inspection team come in and look at the house before Nationwide would be able to offer a quote. It takes 30 days for an inspection to be set up."

So, Mr. Wallace said, HOME deliberately asked for quotes and claimed that the closing of the house was in less than 30 days, thus keeping Nationwide from issuing a quote.

"Not one of their testers was told they could not get insurance," added Mr. Wallace, who also said one house that a black tester asked to obtain insurance on was an utter mess.

HOME attorney Rhonda Harmon, with Richmond-based Mezzullo & McCandlish, said Nationwide's racism was blatant.

"They are writing mobile homes. We're not saying there is anything wrong with mobile homes, but they claim to be writing only in quality markets and mobile home owners are not above the medium. They claimed that was a quality market," she said. "But then there is one ZIP code that should be there, but it is 40 percent black. They excluded that one. The only consistency anyone can find is they were basing it on race."

Again, Nationwide denied the charges. "We remain committed to serving our customers in Richmond and throughout America and will continue to grow our urban market presence," Mr. Millen said. "Nationwide is a responsible corporation that is fully committed to serving the insurance needs of urban residents, and is in strict compliance with all government laws and regulations."

Mr. Wallace said the decision was made on racial baiting by HOME.

"They won this on emotion. It became a racial forum," Mr. Wallace said. "I learned a long time ago the best cases can be won and the worst cases can be lost."

Mr. Wallace said he expected to see the ruling overturned at the state Supreme Court level.

Nationwide recently paid $5.3 million in a discrimination settlement with the Toledo Fair Housing Center of Ohio. Nationwide also paid for the plaintiff's attorney fees. A Lucas County judge approved the settlement in September. Nationwide representative Bob Sohovich said last month that the company agreed to the terms despite admitting no wrongdoing because they did not want to face a prolonged trial.

Among the attorneys handling this most recent case for HOME was Richmond Mayor Timothy Kaine.

Featured Video

Most Recent Videos

Video Library ››

Top Story

Mitigating against the No. 1 natural disaster in the U.S.

Be proactive in mitigating losses from winter flooding by understanding the risk and types of coverage to protect against it.

Top Story

Cyber insurance soaring as risks rise

Insurance and financial services buy the most cyber insurance — but as the cost goes up, will that dampen desires to ease risk?

More Resources

Comments

eNewsletter Sign Up

PropertyCasualty360 Daily eNews

Get P&C insurance news to stay ahead of the competition in one concise format - FREE. Sign Up Now!

Mobile Phone

Advertisement. Closing in 15 seconds.