Industry Moves to Have Courts Vacate Disparate Impact Rule

July 23, 2013
mortgage lending news

The American Insurance Association (AIA) and the National Association of Mutual Insurance Companies filed suit in Washington, D.C.'s U.S. District Court to vacate the Department of Housing and Urban Development's (HUD) disparate impact rule in the sale of homeowners' insurance. The insurance groups say HUD exceeded its authority in adopting the final rule. The suit argues that interpreting the Fair Housing Act to extend disparate-impact liability to the provision and pricing of homeowners' insurance "requires insurers to consider characteristics such as race and ethnicity and to disregard legitimate risk-related factors." The suit contends that the HUD interpretation "would require insurers to provide and price insurance in a manner that is wholly inconsistent with well-established principles of actuarial practice and applicable state insurance law. That is not only a perverse result, but it also flies in the face of the McCarran-Ferguson Act, which entrusts insurance regulation to the states."
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