ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Saturday, February 1, 1997 TAG: 9702030042
SECTION: BUSINESS PAGE: A-5 EDITION: METRO
DATELINE: COLUMBUS, OHIO
SOURCE: Bloomberg Business News
Nationwide Mutual Insurance Co., faced with charges that it avoided minority customers in urban areas, said Friday it plans to open offices in three cities and invest $3million in those cities for poor housing loans.
``Serving this (urban) market effectively, while working to strengthen urban neighborhoods, is a crucial part of Nationwide's business strategy,'' Nationwide President Richard Crabtree said.
Nationwide, the sixth-largest U.S. property and casualty insurer, is the subject of federal and state probes into allegations that it ``redlined,'' or systematically avoided, urban neighborhoods in recent years.
In a press conference, Crabtree said the company would open sales and service offices in Baltimore, Cleveland and Philadelphia in coming months.
Crabtree also announced plans to invest $1million in each of the cities for low- and moderate-income housing loans. ``Nationwide is committed to addressing the needs of the African-American and Hispanic communities,'' said Lorraine Brock, the head of urban markets at the Columbus-based insurer.
As part of the plan, the company will introduce standards that allow agents to write policies for older and less-expensive homes. The standards will take effect April 15 in Illinois, Maryland, Ohio, Pennsylvania and Texas.
Still, the changes may not go far enough, said Stephen Dane, a Toledo-based attorney for housing advocates and agents suing the insurance company. ``The changes in underwriting guidelines are obviously good, though they don't say what they're doing.'' Dane is the lawyer in a class-action suit expected to go to trial before a jury in June. ``Nationwide is in big trouble,'' he said. ``They're going to get hit for a big judgment, and I think the jury will give us punitive damages.''
Nationwide officials said the charges that it discriminated against minority and poor neighborhoods aren't true.
They also said that expanding business in cities now makes sense for the policyholders who own Nationwide. ``America's cities are vital and diverse places to do business,'' said Lorraine Brock, Nationwide's head of urban markets. Nationwide, which twice tried to have the trial moved, could afford damages of more than $1 billion, and jurors in Toledo will be sympathetic, Dane said.
``What's disappointing, from a fair-housing standpoint, is that it took all of these investigations for them to change and they've known for years what the implications were,'' he said.
The insurance company is also being sued by fair-housing groups in Lexington, Ky., and Richmond, Va., and by agents in Detroit, Philadelphia and Louisiana. It was also targeted by two complaints to the Department of Housing and Urban Development.
One complaint, filed by the National Fair Housing Alliance, a Washington-based nonprofit group, led to an investigation by the Justice Department.
LENGTH: Medium: 57 linesby CNB