Allstate eases inner-city rules // Housing group still skeptical

Allstate Corp. says it has relaxed its standards for minoritycity dwellers to get comprehensive homeowner insurance policies, buta fair housing group said Wednesday it sees no evidence that changeshave occurred.

The Northbrook insurer said it began lifting restrictions inApril on providing policies to homes more than 40 years old or worthless than $40,000. It also said it removed a rule that limitsreplacement costs to 150 percent of a home's market value and isincreasing inspection requirements for dwellings considered forinsurance coverage.

The policy change comes to light less than a month aftercompetitor State Farm Insurance announced it was changing its urbanguidelines to settle a discrimination complaint filed with the U.S.Department of Housing and Urban Development.

Allstate spokesman Al Orendorff said the changes were notdirectly linked to such complaints.

"We are always about the business of change," he said."Frankly, we found out that there's good business out there that wecan access. We're just plunging ahead, doing what we normally do."

Insurance industry analysts had predicted major insurers wouldfollow the lead of Bloomington, Ill.-based State Farm, the country'slargest insurance company, in changing its rules. Allstate issuespolicies to one out of every eight houses in the country and is thelargest issuer in inner cities.

But Shanna Smith, executive director of the Washington-basedNational Fair Housing Alliance, said the group's studies found noevidence that Allstate had changed its practices in recent months.She cited a discriminatory complaint filed against Allstate by ablack Cincinnati homeowner.

Candis Smith of Cincinnati contends Allstate and NationwideMutual Insurance Co. in May denied her the replacement cost coverageon her $58,500 home, instead saying it could cover only the cost ofthe mortgage should the house be destroyed. Replacement coverage isthe actual amount of money it would take to rebuild a home.

"Neither one of the insurance companies came out to look at thehouse; they told me over the phone they couldn't give me insurancebecause the house was 50 years old," said Smith, no relation toShanna Smith.

Shanna Smith, of the fair housing group, contended that Allstateroutinely denies such coverage in black and Hispanic neighborhoods,while approving it in white areas.

"Allstate says they're a big insurer of inner-city policies.That's true," she said. "They're a big insurer of inferior policiesthat cost more."

Orendorff said he wasn't familiar with the Cincinnati complaint.But he added that the problem could have arisen because the companyhad not yet gotten regulatory approval to make changes in itsunderwriting guidelines.

"We're rolling out these changes nationwide," Orendorff said."These guidelines are rolled out on a state-by-state basis; they'reapproved at different times."

Shanna Smith said she will ask HUD to complete its investigationof Allstate and Nationwide. The group also will continue to pressfor a Justice Department investigation of whether insurers haveviolated the federal Fair Housing Act by denying black and Hispanichomeowners the same insurance given to whites in comparableneighborhoods, she said.