Erie, agents facing charges of unfair bias

The U.S. Department of Housing and Urban Development has charged that Erie Insurance Group and five independent insurance agencies violated the Fair Housing Act in providing inferior insurance products to homeowners in African-American neighborhoods compared to those offered in white neighborhoods in New York State.

Erie has called the charges “misguided” and blasted HUD for issuing an “inaccurate and inflammatory press release” without a fair hearing on a matter HUD has been looking into for five years.

“When people walk into a store in America, the service and the offerings should not be determined by the color of their skin. That is exactly the type of discrimination we are talking about here,” said Kim Kendrick, HUD’s Assistant Secretary for Fair Housing in the HUD release announcing the action.

Kendrick said that HUD’s investigation found that Erie’s agents did not provide homeowners in African-American neighborhoods in Syracuse, N.Y., with the same level of insurance coverage they provided in predominantly-white neighborhoods in Liverpool, N.Y.

HUD also said its investigation found that Erie was less likely to appoint agents to neighborhoods with large African-American populations.

HUD’s investigation claims that in the 600 New York ZIP codes in which the African-American population is less than 1 percent, Erie has 49 agents, representing 2.7 agents per 100,000-population. In the 27 New York ZIP codes in which the African-American population is greater than 30 percent, Erie has two agents, representing 0.55 agents per 100,000-population. Erie does not market its products or appoint agents on Long Island, in New York City or in the suburban counties north of New York City.

“The numbers don’t lie. Whether you examine Erie by ZIP codes or by families insured, the differences between black and white are clear,” said Kendrick. “This really is about African Americans being denied an equal opportunity to protect the biggest investment of their lives.”

The five agencies licensed to sell Erie insurance products that were charged by HUD were R.K. Johnson & Associates, Salanger & Hayward Agency Inc., CNY Insurance Associates, the Vacco Agency, Inc., and the Grimsley Agency Inc.

Erie Insurance Group issued a statement expressing regret that HUD issued a press release “promoting its misguided claims against Erie and several independent insurance agencies.”

According to Erie, the claims by HUD staff are based on calls to independent insurance agents made more than five years ago as well as on the claim that an insurer’s distribution of agents within a state must mirror the racial composition of each community within that state.

Erie’s counsel, Andrew Sandler of the Skadden Arps law firm, said Erie looks forward to “presenting its defense to these baseless charges and hopes that HUD staff, having already taken five years to pursue its claims, does not seek further delay in permitting Erie to obtain a fair hearing.”