The insurance redlining debate poses challenging policy issues for public officials and theoretical concerns for urban sociologists. Using disclosure laws recently enacted in a few states, researchers can now begin examining the underwriting practices of insurers by neighborhoods in selected cities. In this initial exploratory study, we review the controversy and some pertinent general conditions in the property casualty insurance industry. Then we examine the activity of property insurers in Chicago. We find that residents of neighborhoods having a high concentration of minority or low income families, or older homes, are experiencing difficulty in obtaining insurance, and for reasons that cannot be explained by those factors accounting for most insurance company losses, i.e., incidence of fire and of theft. These findings suggest—as its critics have charged and the insurance industry has generally denied—that redlining of many urban communities and discrimination against the poor and minorities are facts of insurance life, and contribute to the deterioration of those communities. We offer some policy recommendations for eliminating redlining and for stimulating reinvestment in urban neighborhoods. We also suggest that future research on issues pertaining to the uneven development of metropolitan areas will be more informative if based on the structural/disinvestment approach than on the individualistic/natural evolutionary one which has long dominated the study of urban sociology.

Urban Decline or Disinvestment: Uneven Development, Redlining and the Role of the Insurance Industry.

Financial institutions play a critical role in determining the viability of urban communities. As is the case with the geographic distribution of mortgage and business loans, insurance redlining constitutes a major force in fueling the uneven development of metropolitan areas. This article examines the racial effects of insurance underwriting activity in a large midwestern metropolitan area. In analyzing the distribution of homeowners insurance policies, a strong bias in favor of suburban and white neighborhoods and against inner-city and minority communities was found. These patterns reflect both discriminatory nonrational economic behavior on the part of insurers and the logic of rational market processes. Policy recommendations are offered to address the problems inner-city neighborhoods confront in efforts to secure adequate insurance and other financial resources.

Insurance Redlining and the Transformation of an Urban Metropolis

Risk analysis and decision processes

Risk analysis and policy analysis can play important roles in facilitating the siting of potentially hazardous facilities if one recognizes the descriptive features of the decision process. The case of siting a liquified natural gas LNG facility in California illustrates the multi-party sequential nature of the process and the role that widely differing risk estimates play in fueling conflicts between stakeholders. Risk analysis does have a useful function in clarifying the nature of the potential losses, particularly if rules of evidence are instituted for evaluating different studies. Policy analysis can facilitate the negotiation process by the use of compensation to redistribute gains and losses between the different parties. Examples from case studies are presented to illustrate the challenges for risk analysis and policy analysis in the siting process.

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A Decision-Process Perspective on Risk and Policy Analysis

The series of challenges to the autonomy and self-regulatory authority of the professions which occurred in the 1970s has generally been attributed to changes in public attitudes and values. Questioning the adequacy of this explanation, this paper examines the emergence of new or strengthened market, client, and government controls affecting the legal profession and argues that these developments were initiated or facilitated by the actions of segments of the bar itself seeking to further their own interests. New market, client, and government controls served to modify and supplement collegial regulation rather than displace it. Furthermore, it is argued that these developments contribute not so much to the deprofessionalization of the legal profession as to its reprofessionalization whereby the parameters of its autonomy and self-regulatory authority are redefined. Over the past century the classic professions of medicine and law successfully established the right to control their own destinies, to set educational standards, regulate admission to practice, prescribe ethical codes, and discipline deviant practitioners. So successful were they in the assertion of these rights that freedom from external review and self-regulation came to be regarded by sociologists as definitional characteristics of the professions, distinguishing them from other occupations (Carr-Saunders and Wllson; Goode; Greenwood). Historically, then, professional regulation took the form of peer review or collegial regulation (Freidson,b). Professional associations, admissions boards, codes of ethics, and discipline

Developments in the Regulation of Lawyers: Competing Segments and Market, Client, and Government Controls*

This article, the first part of a larger study devoted to the compensation of damages caused by pollution, reviews the existing sources of compensation in the United States: the common law of torts, federal and state statutes, and various forms of commercial insurance coverages. It shows how the rules of nuisance law have remained flexible in response to changing customs and public policies, how for a long time prevailing attitudes favored industrial development and economic growth over physical comfort, and how increasing concerns about the long-term health effects of environmental pollution have created a trend in the opposite direction. The author also points out that the existing system of liability and compensation, which relies on individual actions and case-by-case adjudication, is not ideally suited for dealing with the effects of large-scale pollution or for the —primarily political—task of evaluating and balancing all of the interests and values, present and future, economic and noneconomic, that need to be considered before decisions can be made that are bound to affect the health and economic well-being of a large part of the population beyond the immediate parties to a lawsuit. This indicates a need for a comprehensive approach that would not only coordinate the rules concerning liability and those concerning insurance and other sources of compensation but would also make the compensation of pollution damages an integral part of a thoroughly rational and consistent environmental policy. The various possibilities of constructing such a comprehensive compensation system will be discussed in the second part of the study, to be published in a forth-coming issue of the American Bar Foundation Research Journal.

Environment, Damages, and Compensation

Governments, like business organizations, are exposed to risks of many kinds and have a wide range of options how to respond–from bearing the full risk themselves to obtaining full insurance coverage. The author discusses some of the traditional approaches to governmental risk management in the light of new and increasing risks–such as the liability risk–and the growing sophistication of risk management methods. He notes in particular how a government's risk management decisions differ from those of a business organization because of the unique characteristics of government entities: perpetual existence; taxing power; the need to prevent nepotism, bribery, and corruption in government administration; and political mandates and pressures of all kinds. These forces account for restrictive procurement rules and for various forms of “self-insurance” arrangements. The author finds, among other things, that in most states the rules have not kept pace with the multiplication of risks and the development of new risk management and insurance techniques, and that small and medium municipalities, especially, suffer from inadequate access to sound risk management services. On the basis of an examination of European municipal risk management practices, the author then suggests as an appropriate solution the formation of special mutual insurance organizations for municipal governments, controlled and administered by local government officials.

Governmental Risk Management in Public Policy and Legislation: Problems and Options

Legal Service Plans: A Typology

Lawyers have become concerned about the rising numbers and the rising amounts of professional liability claims, which have in turn driven up liability insurance premiums and temporarily even caused an alarming contraction in the supply of insurance coverage. This article examines the state of factual information that could be used to measure and explain the development. It goes on to discuss the potential role that increased knowledge of the types and causes of professional liability claims could play in efforts to reverse the development, followed by a discussion of the difficulties of obtaining usable data from the two principal potential sources—lawyers and their insurers. The second half of the article describes and evaluates the work of the American Bar Association's Special Committee on Lawyers' Professional Liability in developing, in cooperation with the major insurers, a comprehensive data collection and reporting system for lawyers' professional liability claims.

Types and Causes of lawyers' Professional Liability Claims: The Search for Facts

New Zealand is the place of the big experiment in no-fault accident compensation, and both Geoffrey Palmer's and Terence G. Ison's recent books' deal with this experiment. Since 1967, when a Royal Commission chaired by A. O. Woodhouse recommended abolishing tort liability for practically all accidents resulting in personal injury and putting in its place a comprehensive compensation system, and even more since 1972, when the New Zealand Parliament passed the Accident Compensation Act, that country has attracted the attention of tort lawyers all over the world, particularly those interested in workers' compensation and automobile accident compensation. The no-fault insurance movement in the United States, which has lost much of its vigor in the past five years, has been limited to automobile accidents (except for the more ambitious proposals offered by Jeffrey O'Connell, the most vocal no-fault advocate). The New Zealand system, however, provides compensation, irrespective of the fault or negligence of anyone, for accidents of whatever kind or circumstance, whether in the work place, at home, on the road, in the air, during dangerous sports activities, or even during commission of a crime. The system is operated by a government agency, the Accident Compensation Commission, and is

Werner Pfennigstorf

Papers

Environment, Damages, and Compensation

Governmental Risk Management in Public Policy and Legislation: Problems and Options

Legal Service Plans: A Typology

Types and Causes of lawyers' Professional Liability Claims: The Search for Facts

Accident Compensation in New Zealand: How Does It Work? A Review of Palmer's Compensation for Incapacity and Ison's Accident Compensation