Insurance Redlining and the Process of Discrimination

Insurance redlining and the racially discriminatory consequences of the sale of property insurance have been documented in several cities throughout the United States. In this study teams of “testers”—comparably qualified insurance consumers who differed only in the racial composition of the neighborhood of the homes they sought to insure—contacted three Milwaukee area insurance companies regarding the possibility of purchasing insurance for their homes. Though no blatantly discriminatory behavior was exhibited, agents representing these companies expressed a clear preference to pursue business in white communities and placed additional barriers in the way of testers from nonwhite neighborhoods. These findings parallel changes in other institutional sectors of the housing industry where blatantly discriminatory behavior has generally given way to more subtle forms of bias. Policy recommendations are offered to reduce existing racial disparities in the availability of insurance and to open up housing markets in general for minorities.