SAN ANTONIO, TEXAS–A national regulators' session to discussguidelines insurers use to rate customers as risks turned into adebate between consumer and industry representatives over redliningyesterday.

Redlining, the controversial practice of refusing coverage to ageographic area because of its ethnic and economic makeup, becamean issue at a hearing of the National Association of InsuranceCommissioners panel.

The session, conducted by the NAIC Market Conduct Committeeduring the NAIC annual winter meeting, was called to discusswhether a review of insurers' underwriting and risk classificationguidelines is needed.

“If it ain't broke, don't break it,” said David Snyder,assistant general counsel of the American Insurance Association atthe NAIC's annual winter meeting.

But consumer representatives, such as Bernie Birnbaum of theCenter of Economic Justice and Connie Chamberlin of HousingOpportunities Made Equal of Virginia Inc., disagreed.

“There are substantial levels of discrimination and redlining inthe personal lines insurance marketplace,” Ms. Chamberlin said.

She called on the NAIC to encourage its members to “use provenmethodologies to determine the extent of insurancediscrimination.”

Mr. Snyder said that evidence of a thriving insurance market inurban areas belies any claim of so-called redlining ordiscrimination against certain neighborhoods.

“With fewer than 2 percent of auto insurance in residualmarkets, the largest line of insurance coverage, we call upon theNAIC to reject demands for more controls over risk classification,so that recent progress can continue to be made on servingcustomers in all areas, including urban markets,” he said.

Don Cleasby, vice president of the Property Casualty InsurersAssociation of America (PCI), said the common flaw of consumergroup studies is that they do not take into account loss costs.

“After analyzing decades of loss experience, insurance companieshave determined that the geographical location of where the vehicleis garaged and where the dwelling is located is one of the mostpredictive variables in determining insured loss expectancy,” hesaid.

Mr. Birnbaum urged the panel to evaluate the impact of new riskclassifications and recommend solutions to any identified problemsin personal lines availability affordability and fairness.

“We also think the regulators should identify potential problemswith risk classifications that involve unfair discrimination andinsurance availability and affordability issues,” he said.

North Dakota Commissioner and panelist Jim Poolman said thegroup will evaluate the testimony over the next few weeks to seewhat actions may be taken in 2007.