One of the most important and interesting developments at therecent NAIC meeting came in under the radar and took most insurersby surprise–a controversial call to force homeowners carriers tocollect and disclose data on the race, gender and income bracket oftheir prospects and clients. In responding, insurers are damned ifthey do and damned if they don't support the proposal.

(To read full coverage of the proposal, click here.)

The suggestion came from Greg Squires, a sociology professor atGeorge Washington University, who delivered his pitch at theNational Association of Insurance Commissioners meeting in Orlandoduring his first appearance as a funded consumerrepresentative.

Greg and I go way back. I have published a number of his op-edcolumns over the years, particularly in the late 1990s, aboutallegations of insurance redlining of poor and minoritycommunities. I will allow him to make his case more fully for hislatest regulatory initiative in a “Final Say” column in NU's April21 edition, and will publish it here on this blog afterwards togenerate additional comment.

For now, suffice it is to say that insurers are not happy aboutthe idea, and are likely to fight it tooth and nail.

As reported by our own Dan Hays, Montana Insurance CommissionerJohn Morrison, who chairs NAICs Market Regulation and ConsumerAffairs Committee, was encouraging, telling Mr. Squires his panelis discussing” the proposal. “Were on top of this issue. Its brighton our radar screen.

Obviously, Mr. Squires is eager for insurers to collect andprovide access to such data to see once and for all if insurers areactively engaging in redlining, or are passively doing so–viadisparate impact (in other words, even if their intent isnon-discriminatory, the end result comes out that way, unfairlydisadvantaging one racial, gender or economic group).

Just as obviously, insurers don't want to collect such databecause, for one, it might very well expose them to lawsuits overtheir underwriting patterns–however neutrally they are applied–andit might annoy or provoke those asked to list their race, income,etc., on a homeowners insurance application.

Mr. Squires argues effectively that he is not reinventing thewheel here. Essentially, he says he is simply calling for the samedata required of home mortgage lenders under the federal HomeMortgage Disclosure Act. He told the NAIC that HMDA and otherfair-lending laws helped improve access to credit for low-incomeand minority markets, and suggested the same might be said ofinsurance down the road.

Mr. Squires pretty much dismissed industry concerns that releaseof such data would violate confidentiality of policyholders, revealtrade secrets or market strategies, and open the door to frivolouslegislation, saying no such side effects have resulted from bankingmandates.

Insurers aren't buying it, and will no doubt have to be draggedkicking and screaming into compliance, if the NAIC should ever getaround to passing such a model law.

I wouldn't hold my breath on this, Greg. For one, the NAIC movesmore slowly than evolution. Man might evolve into a higher speciesbefore the NAIC moves the initiative through its long, drawn-outprocess and actually approves a model data collection anddisclosure law.

Then, of course, the battleground would shift to each state,with insurers lobbying every insurance department and legislatureto derail the model's passage.

Personally, while this might indeed open a Pandora's box for theindustry, I don't necessarily see the harm. It might even helpinsurers prove that they do not in fact discriminate against anyonein their underwriting and pricing decisions.

Of course, if the data shows that discrimination does occur–evenif unintentionally–at least we'd have the facts we'd need to havean intelligent debate on the subject.

What do you folks think?