HUD says insurer biased
Syracuse homes red-lined, say investigators
Friday, October 27, 2006
By Tim Knauss, Staff writer
Federal officials Thursday accused five Syracuse-area insurance agencies
and a Pennsylvania-based insurance company of discriminating against
The U.S. Department of Housing and Urban Development said they offered
worse insurance coverage to homeowners in racially mixed neighborhoods of
Syracuse than they offered in white neighborhoods in the Liverpool area.
The agencies and Erie Insurance Group are accused of violating the federal
Fair Housing Act, which makes it illegal to refuse to provide insurance
based on race or to provide insurance differently based on race.
"This really is about African-Americans being denied an equal opportunity
to protect the biggest investment of their lives," said Kim Kendrick,
assistant secretary for fair housing and equal opportunity.
The insurance agencies named in HUD's complaint are R.K. Johnson &
Associates Insurance Agency, of Camillus; Salanger & Hayward Agency, of
Syracuse; The Vacco Agency, of Fayetteville; the Grimsley Agency, of North
Syracuse; and CNY Insurance Associates, of Liverpool.
HUD's civil complaint stems from an investigation in 2000 and 2001
conducted by the Fair Housing Council of Central New York, a Syracuse
nonprofit group that fights housing discrimination.
Undercover investigators from the council called each of the local
insurance agencies, which are licensed to sell Erie Insurance, pretending
to be first-time home buyers and seeking hazard insurance.
In eight out of 12 cases, the callers from Syracuse neighborhoods with
large black populations either were not offered insurance or were offered
less coverage than callers from predominantly white neighborhoods in the
Those results prompted the Fair Housing Council to contact HUD, said
Merrilee Witherell, the council's executive director.
Robert Hayward of Salanger & Hayward and Don Grimsley of Grimsley Agency
declined comment Thursday. Other agency owners could not be reached.
Mark Dombrowski, speaking for Erie Insurance, of Erie, Pa., said he did
not have enough information about HUD's complaint to comment Thursday
After receiving the Fair Housing Council's allegations, HUD conducted its
own investigation to assess Erie's sales activity in different
neighborhoods, said Bryan Greene, deputy assistant secretary for
enforcement and programs.
According to HUD's analysis, in 600 New York ZIP codes where blacks
represent less than 1 percent of the population, Erie Insurance has 49
agents, or 2.7 agents per 100,000 people. In 27 ZIP codes in which blacks
are more than 30 percent of the population, Erie has two agents, or 0.55
agents per 100,000 people.
As a result, the more blacks in a community, the less likely Erie is to
sell insurance there, HUD officials said.
Kendrick, the HUD assistant secretary, said Erie and the agencies have
disputed the allegations against them.
The complaint will be heard by a HUD administrative law judge, unless Erie
and the agencies elect to have their cases heard in federal district
court. The hearing is tentatively scheduled for Jan. 23.
HUD can impose a maximum fine of $11,000 for each incident. In addition,
the Fair Housing Council will seek compensation for its costs to
investigate and pursue the case, Witherell said.
The Fair Housing Council launched its investigation after hearing
allegations about Erie Insurance from fair-housing advocates in other
communities, Witherell said.
For the investigation, the council matched houses in Syracuse and the
Liverpool area by age, condition, size, purchase price and other factors.
In each test, callers ask for an insurance quote for a Syracuse house and
for the Liverpool-area house that matched its characteristics.
The Syracuse houses were on Cheney Street in ZIP code 13207, and on
Fillmore Avenue, Pleasant Avenue and Cannon Street in ZIP code 13205. The
percentage of homes owned by a black or a person of mixed race in those
census tracts ranges from 37 percent to 61 percent, HUD said.
The Liverpool-area houses were from Fourth Street, Sixth Street, Plaxdale
Road (Salina) and Melvin Avenue, all in ZIP code 13088. The percentage of
homes owned by a black or a person of mixed race in those census tracts
ranges from 0.4 percent to 1.3 percent, HUD said.
In four tests, the Syracuse callers received no insurance quote despite
specifically asking for one. Their Liverpool-area counterparts received
In four other tests, Syracuse callers received quotes for Extra´cover,
Erie's second-broadest policy. Their Liverpool-area counterparts received
quotes for Ultracover, Erie's best policy, which offers more extensive
coverage for $1 more.
Tim Knauss can be reached at
firstname.lastname@example.org or 470-3023.
© 2006 The Post-Standard.