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Testing for Discrimination in Home Insurance: Results from New York City and Phoenix

Author

Listed:
  • George Galster

    (College of Urban, Labor, and Metropolitan Affairs, F/AB Room 3198, Wayne State University, Detroit, MI 48202, USA, George_Galster@wayne.edu)

  • Douglas Wissoker

    (The Urban Institute, 2100 M Street NW, Washington DC20037, USA, dwissoke@ui.urban.org)

  • Wendy Zimmermann

    (The Urban Institute, 2100 M Street NW, Washington DC20037, USA, Wzimmerm@ui.urbanorg)

Abstract

This paper examines the results of a paired testing study of neighbourhood-based discrimination in the provision of quotes for home insurance in New York City and Phoenix, Arizona. We examine whether agents treated insurance-seekers buying their first homes in moderate-income, predominantly black or Hispanic-occupied neighbourhoods differently from insurance-seekers in comparable predominantly white neighbourhoods. The study examines differences in whether a quote is provided, the type of insurance and policy options offered and the premium quoted. Overall, of 10 key measures (5 for each city), only 1 (optional replacement cost coverage on personal property in Phoenix) showed a statistically significant difference consistent with discrimination. Testers in Hispanic neighbourhoods of Phoenix were quoted premiums 12 per cent higher than those offered to testers in white neighbourhoods. This difference, however, is in line with the price schedules for the state-approved rating territories in which the white and Hispanic homes were located.

Suggested Citation

  • George Galster & Douglas Wissoker & Wendy Zimmermann, 2001. "Testing for Discrimination in Home Insurance: Results from New York City and Phoenix," Urban Studies, Urban Studies Journal Limited, vol. 38(1), pages 141-156, January.
    • Handle: RePEc:sae:urbstu:v:38:y:2001:i:1:p:141-156
    DOI: 10.1080/00420980125481
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    References listed on IDEAS

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    1. John Yinger, 1998. "Evidence on Discrimination in Consumer Markets," Journal of Economic Perspectives, American Economic Association, vol. 12(2), pages 23-40, Spring.
    2. R G Coyle & J D W Morecroft, 1999. "Guest Editor's Introduction," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 50(4), pages 294-294, April.
    3. Helen F. Ladd, 1998. "Evidence on Discrimination in Mortgage Lending," Journal of Economic Perspectives, American Economic Association, vol. 12(2), pages 41-62, Spring.
    4. William A. Darity & Patrick L. Mason, 1998. "Evidence on Discrimination in Employment: Codes of Color, Codes of Gender," Journal of Economic Perspectives, American Economic Association, vol. 12(2), pages 63-90, Spring.
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    Cited by:

    1. Mohammadali Zolfagharian & Fuad Hasan & Golnaz B. Motie & Gregory D. Squires, 2020. "Perceptions of Home Insurance and Policy Directions: Comparing Mexican Americans and Non‐Hispanic White Americans," Journal of Consumer Affairs, Wiley Blackwell, vol. 54(2), pages 417-455, June.

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