Housing Section Documents
IN THE UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
UNITED STATES OF AMERICA,
Plaintiff,
v.
CIVIL ACTION No. C2-97-291
NATIONWIDE MUTUAL INSURANCE
COMPANY; AND NATIONWIDE MUTUAL
FIRE INSURANCE COMPANY,
Defendants.
___________________________________
CONSENT DECREE
TABLE OF CONTENTS
CONSENT DECREE
- INTRODUCTION AND SUMMARY
- GENERAL INJUNTIVE RELIEF
- NATIONWIDE'S COMPREHENSIVE PLAN TO INCREASE SERVICES TO URBAN COMMUNITIES
- Criteria For Insurance Coverage Eligibility
- Criteria For Homeowners Insurance Coverage Pricing
- Company Presence In Urban Areas: General
- Company Presence In Urban Areas: Sales/Service Centers
- Advertising And Marketing
- TRAINING
- Training By Nationwide
- Training By Qualified Organization
- TESTING
- COMUNITY INVESTMENT
- REPORTING REQUIREMENTS
- IMPLENTATION OF DECREE
The United States has brought this action pursuant to the Fair
Housing Act (Title VIII of the Civil Rights Act of 1968, as
amended by the Fair Housing Act Amendments Act of 1988), 42
U.S.C. 3601, et seg., and alleges in its Complaint that the above
Nationwide insurance companies named as defendants (Nationwide)
have violated the Act by discriminating on the basis of race,
color and national origin in the provision of homeowners
insurance.
The claims of the United States in this lawsuit focus
fundamentally on certain underwriting policies of Nationwide
which allegedly discriminate against homeowners in minority
neighborhoods on a prohibited basis by making it more difficult
for such homeowners to either obtain quality insurance for their
homes or to obtain any homeowners insurance at all. These
policies include requirements which allegedly make insurance
coverage unavailable or less valuable based on the age and market
value of a home, as well as on the basis of the ratio of a home's
market value to replacement cost. The United States asserts that
predominantly minority communities and their residents have
suffered harm as a result of these practices restricting access
to Nationwide's homeowners insurance. The United States further
alleges that Nationwide has engaged in intentional discrimination
against homeowners in minority neighborhoods by deliberately
limiting the company's presence in minority neighborhoods, in
large part through the underwriting rules mentioned above.
Nationwide denies that it has engaged in any form of
discrimination in violation of the Act and affirmatively states
that its underwriting practices are lawful and based on
legitimate business considerations. Nationwide has challenged
whether the Fair Housing Act (Title VIII of the Civil Rights Act
of 1968, as amended by the Fair Housing Amendments Act of 1988)
applies to its homeowners insurance practices. Nationwide filed
suit in the United States District Court for the Southern
District of Ohio asserting that the Act does not apply. The
District Court rejected Nationwide's position, and the ruling
that the Fair Housing Act covers the business of homeowners
insurance was affirmed by the United States Court of Appeals for
the Sixth Circuit. See Nationwide Mutual Ins, Co. v. Cisneros,
52 F.3d 1351 (6th Cir. 1995). The Supreme Court denied
Nationwide's petition for certiorari. See 116 S. Ct. 973 (1996).
Nevertheless, Nationwide, while not waiving its jurisdictional
argument nor admitting that the Fair Housing Act and its
amendments are applicable to it or any other property insurance
carrier, see Mackey v. Nationwide Insurance Cos., 724 F.2d 419
(4th Cir. 1984), has approached the United States and indicated a
willingness and an intention to voluntarily change its
underwriting policies and enter into this Consent Decree.
The United States alleges that the challenged underwriting
practices have limited the availability or terms of availability
of homeowners insurance in areas which are predominantly minority
in population. Indeed, to the extent such areas have a large
percentage of homes which are older or which have a low market
value, the United States contends that Nationwide's policies have
led to efforts to avoid doing business or to limit business in
such areas due to the presence there of homes not insurable or
subject to restrictions under those policies. The United States
further maintains that this has led to an under served market for
homeowners insurance in minority communities, particularly in
urban areas.
The United States alleges that such business practices can cause
damage to minority neighborhoods. If a property owner cannot
obtain sufficient coverage to rebuild a dwelling that is
destroyed by fire, for example, a vacant structure remains in the
neighborhood and affects the values of surrounding properties.
The lowered property values in turn make obtaining sufficient
insurance coverage more difficult. The failure to provide equal coverage in minority areas thus can contribute to disinvestment
and a downward spiral of community deterioration.
The United States further contends that there are numerous
quality and insurable homes in urban areas under served through
application of Nationwide's underwriting policies.
There has been no factual finding or adjudication with, respect
to any matter alleged in or arising out of the Complaint in this
case. Nor does Nationwide's entry into this Consent Decree
constitute in any manner an admission that any of the challenged
practices are unlawful. However, consistent with Nationwide's own
plans to expand its business in the predominantly minority
community, and to achieve certainty and finality, the parties
freely and voluntarily enter into this Consent Decree to resolve
the claims raised in this litigation. The parties agree that the
terms of this Consent Decree provide a reasonable means of
addressing the concerns of the United States and Nationwide.
For the most part, this Decree summarizes and codifies steps
Nationwide had already determined to take based on its own
assessment of its business interests. Through this Consent
Decree, Nationwide reaffirms its commitment to make its business
decisions without regard to race or national origin and to serve
all communities in the areas in which it does business,
regardless of the predominant race or national origin of
residents of those areas. To complement its decision to change
its underwriting policies, Nationwide has, among other things,
devised a comprehensive plan to capture the urban market through
focused advertising, increased agency presence in these areas,
and community outreach efforts.
This Court has jurisdiction to consider and resolve these claims
pursuant to 42 U.S.C. § 36-14(a) and 28 U.S.C. §§ 1331 and, 1343,
and the parties agree to and request entry of this Consent Decree
as indicated by the signatures appearing below.
THEREFORE it is hereby ORDERED, ADJUDGED and DECREED that:
GENERAL INJUNCTIVE RELIEF
- Scope of decree. Except as otherwise specified below,
all terms contained in Sections I through VIII shall
apply everywhere in the country that Nationwide does
business. For purposes of this Decree, the term
"homeowners insurance," shall refer to all insurance
policies covering owner occupied dwellings, including
condominium policies, but not including mobile home
coverage.
- Injunction against discrimination. Nationwide, its
officials, employees, contractors, agents, and through
them, their employees and successors, are enjoined from
engaging in any act or practice that unlawfully
discriminates on the basis of race, color or national
origin in the provision of homeowners insurance,
imposing on the basis of race, color or national origin
different terms or conditions for the availability of
homeowners insurance, or making any statement that
indicates any preference, limitation, or discrimination
with respect to the provision of homeowners insurance
based on race, color or national origin. This
prohibition includes, but is not limited to, any use of
the racial or ethnic composition of a city, zip code,
neighborhood, block, or other geographic area as a
factor in any decision regarding the availability,
price, administration, terms, or marketing of
homeowners insurance, except to the extent necessary to
comply with this Consent Decree and any other
applicable federal and state laws or regulations.
NATIONWIDE'S COMPREHENSIVE PLAN TO INCREASE SERVICES TO URBAN COMMUNITIES
- Criteria For Insurance Coverage Eligibility
- Schedule for implementation. Nationwide will implement
the changes discussed in this Section A in all states
in which it does homeowners business over a 24-month
period beginning April 15, 1997. In Ohio, Pennsylvania,
Maryland, Illinois, and Texas, it will implement these
changes as of April 15, 1997, except as such changes
relate to condominium policies, which will be
implemented as of July 15, 1997, and use its current
policy forms until the ultimate decision on new
product(s) or modification of existing products, as
described in paragraph III.A.3 below are determined.
- Underwriting standards changes and policy forms. Nationwide will change its underwriting standards to
eliminate all references to and the use of the age of a
dwelling and minimum value as eligibility criteria to
obtain any Nationwide homeowners policy, as described
above. Additionally, Nationwide will not consider the
relationship between a home's market value and its
calculated replacement cost in deciding eligibility for
insurance. Each customer whose dwelling passes the
dwelling condition inspection of the interior and
exterior and otherwise satisfies Nationwide's
underwriting guidelines will be given the option of
selecting replacement cost coverage (guaranteed or non
guaranteed) or repair cost coverage (i.e. replace with
conventional materials and construction methods) on the
dwelling and/or contents. Within twenty-four months
from April 15, 1997, customers will also be given the
option of purchasing replacement cost coverage with
policy limits valued at less than 100% of the
replacement cost of the home, such as at 75% of the
replacement cost (the "value percentage"). For all such
policies, in the event that the customer files a claim,
Nationwide does not now and will not impose a
coinsurance penalty on a partial loss, i.e. settle the
claim pro rata by multiplying the claim amount by the
value percentage. Rather, the claim shall be settled
under the same standards as are applied to policies
valued at 100% of the home's replacement cost, up to
the limits of the policy. Nationwide will make
available to the United States a copy of its
underwriting eligibility standards for its inspection
upon request.
- Study of other policy forms. Nationwide has undertaken
to study whether it would be in its interests and the
interests of its current and prospective homeowner
policyholders to create and implement a single
homeowners insurance policy, or make product
modifications to existing products. The company agrees
to continue to study and evaluate these concepts and to
report to the United States in the near future on
whether the concept of a single policy or current
products with modifications would in fact better serve
the interests of Nationwide, its customers, and the
United States.
- Age of home and systems, market value not considered. Nationwide will not consider in any way the age or
market value of a home as a criterion for eligibility
for homeowners insurance coverage or for eligibility
for certain types of coverage. Further, Nationwide will
not consider the relationship between a home's market
value and replacement cost in deciding eligibility for
insurance coverage or the types of coverage that may be
available. In addition, Nationwide will consider only
the condition of a home's plumbing and wiring systems
as revealed by inspections, and not the age of these
systems, in determining eligibility for homeowners
insurance. Consistent with the above and as agreed to
by the parties, Nationwide will revise its homeowners
insurance eligibility criteria with regard to
electrical service amperage, knob and tube and aluminum
wiring, and roof type to be set forth in its
underwriting guidelines. Such guidelines will be
provided to the United States within thirty (30) days
of the entry of this Decree and thereafter upon
request.
- Use of credit history as insurance eligibility
criteria. Nationwide plans to consider, in some
circumstances, an applicant's credit history in
deciding whether to provide homeowners insurance. The
use of credit histories is an evolving factor in
insurance underwriting and the company shall not be
precluded from making appropriate risk-based
innovations. At the same time, the company agrees to
implement safeguards to ensure that such evolving
standards do not discriminate on the basis of race or
national origin.
This decree does not establish or approve any standards that Nationwide might use to evaluate creditworthiness. During the term of the Decree, however, Nationwide will compile and maintain complete records regarding its use of credit history as an underwriting standard, and report such information to the United States, as required by Section VI.l.m below. In addition, Nationwide agrees to comply fully with the Fair Credit Reporting Act, 15 U.S.C. §§ 1681 et seg. In the event that the United States notifies Nationwide that the manner in which credit histories have been used may discriminate on an unlawful basis, the parties agree to enter discussions designed to address the issues. If the parties are unable to resolve any disagreement within thirty days, the matter may be submitted to the Court for resolution.
- Use of adjacent properties or subjective standards as
insurance eligibility criteria. In determining whether
a property is eligible for insurance, Nationwide will
not consider whether an adjacent property is vacant or
substandard, unless the adjacent use is demonstrated by
an inspection to present a specific hazard to the
property seeking insurance which would provide a basis
for a claim. Nationwide will eliminate any underwriting
guideline which indicates that an adjacent property is
of high hazard on the sole basis that it is abandoned.
Further, Nationwide will delete subjective, vague
underwriting criteria such as "pride of ownership" and
"good housekeeping."
- Notice letters to rejected applicants. If Nationwide
determines that a home (1) does not qualify for
Nationwide homeowners insurance; (2) does not qualify
for replacement cost coverage; or (3) that an existing
homeowners insurance policy must be canceled or not
renewed (for reasons other than nonpayment of premium
by the policyholder), Nationwide will notify the
prospective or current customer(s) by letter which
fully explains the reason(s) for the adverse
determination consistent with federal and or state
laws. Nationwide will also determine what repairs, if
any, can be made to render the property insurable or
eligible for replacement cost coverage. If such repairs
are possible, Nationwide will additionally inform the
prospective or current customer by letter that they may
be eligible for insurance or replacement cost coverage
if the specified repairs are made within a reasonable
period of time (at least 90 days). Nationwide will not
guarantee or be required to keep coverage in effect
pending notification that the repairs have been made.
The letter sent to a customer pursuant to this
paragraph will include the name and telephone number of
the agent and/or the underwriter and will encourage the
customer to contact Nationwide if they need more time
to make the necessary repairs, disagree with the
determination made, or have any questions.
For those risks that independent contractor agents determine do
not qualify for Nationwide homeowners insurance, or replacement
cost coverage, Nationwide will request that the agents provide
Nationwide with the information upon which the agents made their
determinations in accordance with subparagraph 9 below.
- Notice letters to present customers. Nationwide shall
send a written notice in the form of Exhibit A to all
its present homeowners policyholders who do not have
replacement cost coverage, advising them of the changes
in Nationwide's underwriting guidelines as set forth in
Section III.A.2 above, and informing them that they may
now be eligible to obtain replacement cost coverage.
These notices shall be sent to customers upon their
next annual renewal after the underwriting standards
have been changed and in effect in their state, as set
forth in Section III.A.1 above, except that in the
states of Ohio, Pennsylvania, Maryland, Illinois, and
Texas, the notice shall be sent upon the next renewal
or within 45 days after April 15, 1997, whichever is
later.
- Second-tier review of rejected applications. To assist
in monitoring the progress of Nationwide's program to
create greater access to homeowners insurance, all
agents in the Cleveland, Baltimore, and Philadelphia
metropolitan areas will be instructed to send to
Nationwide's Urban Markets Development Office a copy of
each letter written pursuant to Section III.A.7 above
which involves customers who ultimately were not able
to qualify for Nationwide homeowners insurance. A
designated officer of the Urban Markets Office will
undertake a study of these coverage rejections,
obtaining further information from the agents in
question as necessary, to determine if there is any
change in (a) company policies, or (b) agent
application of company policies or other agent
practices which could allow for coverage of these and
similarly situated individuals, consistent with sound
business practices. The results of this second-tier
review will be incorporated into Nationwide's business
practices to the fullest extent feasible. In conducting
this review, the Urban Markets Office will also use the
testing results discussed in section V. The Urban
Markets Office will annually report the results of its
review for each city as set out in Section VII.
- Criteria For Homeowners Insurance Coverage Pricing
- Excluded criteria. Nationwide has determined that in
setting homeowners insurance prices, it will not
consider in any way the age of the home (except (a) for
earthquake coverage; or (b) as necessary to make
available new home credits), the market value of the
home, the relationship between the home's market value
and replacement cost, the credit history of the
prospective insurance customers, nor characteristics
that are unfairly discriminatory and that are not
reasonably relevant to the insurance risk. In
particular, Nationwide will not consider the race or
ethnicity of the homeowner or the minority percentage
of the area in which the homeowner resides in setting a
price for insurance coverage.
- Designation of territories. Nationwide will not define
geographic rating territories in such a manner as to
discriminate on the basis of race or national origin.
Nationwide's designation of rating territories will be
based upon non-discriminatory loss experience criteria
and not on racial or ethnic factors or the racial
composition of geographic areas, as permitted and/or
required and/or approved by state insurance regulators.
- Company Presence In Urban Areas: General.
- General. Nationwide intends to make affirmative efforts
to increase its presence in predominantly minority
areas of cities in which it does business. These
efforts will both increase the number of agents and
agencies located in such areas, as well as encourage
agents located outside these areas to insure properties
located in these areas.
- Notice to employees and agents. Nationwide will also
communicate to its employees and agents that have any
responsibilities relating to Nationwide's homeowners
insurance business, its affirmative desire to increase
the number of policies written and agencies located in
predominantly minority areas. With respect to sales
agents, this communication will take the form of a
written letter or memorandum stating this company
business goal and explaining that the company
encourages this market penetration. This notice will be
sent to all agents within 45 days after entry of this
Decree.
- Efforts to increase agency presence in urban areas.
Nationwide will use its best efforts to recruit and
retain agents to locate in and serve predominantly
minority neighborhoods in urban areas.
- Reassignment of files of terminated agents. Where an
agent with an office in a predominantly minority area
or with predominantly minority customers leaves
Nationwide for any reason, Nationwide will make
reasonable efforts to reassign the accounts of that
agent to the agent or agents closest to the former
agent's office.
- Company Presence In Urban Areas, Sales/Service Centers
- General. As an additional method of achieving market
penetration in urban communities, Nationwide has
established Sales/Service Centers in predominantly
minority areas in San Antonio, Texas and Chicago,
Illinois. "Sales/Service Centers" will be designed to
enhance Nationwide's presence in selected urban areas,
to increase sales and claims service delivery to urban
customers, especially those living in or near the
center or urban areas. Generally, the Sales/Service
Center will be responsible for prospecting for new
business, setting up sales appointments, accepting
billing payments, handling customer inquiries, claims
settlement activities, review of risk selection and
trends. Nationwide has also decided that by December
31, 1997, it will establish other Sales/Service Centers
in predominantly minority areas in Philadelphia, PA;
Cleveland, OH; and Baltimore, MD. Nationwide will
continue this Sales/Service Center program over the
life of this Decree by establishing annually, two
additional Sales/Service Centers in locations to be
chosen by Nationwide. Nationwide plans that the
remaining Sales/Service Centers will be developed in
Louisville, KY; Richmond, VA; Cincinnati, OH;
Pittsburgh, PA; Atlanta, GA; Charlotte, N.C.; Columbus,
OH; Little Rock, AK; Dallas-Fort Worth, TX; Chicago,
IL; Memphis, TN; and Indianapolis, IN. In the event
that during the term of this Decree, Nationwide desires
to change one or more of these cities due to changed
circumstances, Nationwide shall so notify the United
States. Depending on the success of these initial
efforts, Nationwide foresees adding to this list,
and/or accelerating the pace of development of these
Sales/Service Centers.
- Staffing of Sales/Service Centers. Each Sales/Service
Center will be staffed with at least one sales agent,
and sufficient personnel and equipment such that they
can perform all sales, underwriting, and claims
services provided to prospective and current Nationwide
customers. To the extent possible, Nationwide will hire
staff from the local community. For Sales/Service
Centers serving Hispanic communities, at least one
staff member shall be fluent in Spanish.
- Outreach services. Nationwide will also develop a
program for implementation at each Sales/Service Center
providing for Sales/Service Center staff to do the
following:
- work on insurance education projects designed to
inform residents of the community, including
Spanish-speaking residents, about homeowners
insurance availability, their insurance coverage
options, and how to obtain sufficient coverage to
actually replace their homes;
- work with neighborhood fair housing, community
development, and other local groups to identify
residents who may need homeowners insurance;
- work with local fire and police departments to
educate residents on ways to reduce crime and fire
hazards, promote neighborhood safety, and
generally minimize risks; and
- send representatives to festivals, fairs,
neighborhood association meetings, and other
community events to identify and educate residents
in need of homeowners insurance.
- Fair Housing Materials. Each Sales/Service Center will
have available for distribution, free of charge to
anyone who requests it, fair housing materials,
including but not limited to government brochures
explaining the Fair Housing Act, and brochures
explaining Nationwide's goals and commitment to
marketing and sales to the minority community.
- Advertising And Marketing
- Use of marketing firm. Nationwide has contracted with
DAR Public Relations, Inc., an established market
research firm to determine and implement effective
advertising strategies in minority communities.
- Brochures. Nationwide will develop, in both English and
Spanish, a brochure describing its homeowners policy
forms and coverage options. This brochure will
specifically state Nationwide's interest in serving
minority communities and its commitment to equal
opportunities for insurance coverage. Nationwide will
make all reasonable efforts to distribute both the
English and Spanish versions of the brochure through
such channels as real estate and housing professionals
serving the minority community, church and community
groups, and retail outlets in predominantly minority
areas. Copies of these brochures will also be made
available for distribution at the Sales/Service
Centers. Nationwide will ensure that all these outlets
receive a sufficient supply of both the English and
Spanish versions of the brochures to distribute to all
interested people.
- Equal opportunity notice: print media. Within forty-five (45) days after entry of this Consent Decree, all
of Nationwide's print advertising for homeowners
insurance will contain an equal housing opportunity
logotype, statement, or slogan as described in the Fair
Housing Advertising regulations of the United States
Department of Housing and Urban Development, 24 C.F.R.
Part 109 (1995), copy attached as Exhibit B. Nationwide
will follow the guidance of Tables I and II of Appendix
I to 24 C.F.R. Part 109 (1995) in selecting appropriate
type size as well as a slogan, statement, logotype, and
other standards for advertising.
- Equal opportunity notice: radio and TV. In all
television and radio advertisements and promotions for
homeowners insurance, except radio ads of fifteen
seconds or less in duration, the statement "Equal
Housing Opportunity" will be stated audibly. For radio
ads, Nationwide shall have forty-five days after entry
of this Decree to meet this standard. In the
alternative, if a television advertisement or promotion
for homeowners insurance includes a written statement
appearing on the screen, the nondiscrimination
statement may so appear; the nondiscrimination
statement must continue to meet the requirements set
forth in Appendix I to 24 C.F.R. Part 109 (1995) and
must appear on the screen as long as any other written
statement appears.
- Human models. Any Nationwide advertising that uses
human models in videos, photographs, drawings or other
graphic techniques will reasonably represent minority
as well as white persons in such a manner as to
indicate to the general public that Nationwide's
products are available on a racially nondiscriminatory
basis.
- Marketing plans. All of Nationwide's marketing plans
and guidelines, including but not limited to Local Area
Marketing Plan (LAMP) reports and associated maps,
shall reflect Nationwide's commitment to serve
predominantly minority communities and urban areas as
indicated in this Decree. This subparagraph shall not
prevent Nationwide from using race neutral demographic
data such as percentage of household growth in
selecting markets to target in addition to the
predominantly minority communities targeted pursuant to
this Decree.
- Public education. Nationwide's Sales/Service Center
staff will conduct public education concerning home
insurance needs and options, and may contract with a
qualified organization to collaborate with the staff on
such projects. Though this public education will not
specifically exhort recipients to purchase homeowners
insurance from Nationwide, recipients will be informed
of Nationwide's efforts to reach out to minority
communities, as well as the name, phone number, and
location of the nearest Nationwide sales agent.
- Direct mail from Sales/Service Centers. Sales/Service
Centers will mail a notice to non-condominium, owner-occupied single-family residences (1) in the communities
they serve, informing them of the availability of
Nationwide homeowners insurance in the area, the desire
of the company to sell policies in the community, and
the name and- telephone number of the person(s) they
may contact for further information. For residences in
predominantly Hispanic neighborhoods, such notices
shall also be in Spanish.
- Targeted print advertisements from Sales/Service
Centers. During the term of this Decree, each
Sales/Service Center will place advertisements for
homeowners insurance in a local publication with a
circulation that is predominantly African American in
readership as well as Spanish language versions in a
local Spanish language newspaper. Within 90 days after
entry of this Decree, Nationwide will develop an
appropriate ad campaign to reach the minority
communities, and provide the details of such intended
ad campaign to the United States upon development. Such
ad campaign will include the placement of an
advertisement eact year in the relevant city's "Black
Pages" or comparable publication.
- Targeted radio and TV advertising from Sales/Service
Centers. To advertise homeowners insurance, each
Sales/Service Center will place advertisements on at
least three different local radio and/or television
stations with programming oriented to the African
American and/or Hispanic community. The advertisements
on Hispanic oriented stations shall be in Spanish.
These targeted advertisements shall total one out of
every five radio advertisements placed by Nationwide's
management or corporate offices in each metropolitan
area with a Sales/Service Center. Nationwide may vary
the frequency of the spots and choice of stations for
its advertising campaigns, as long as the above overall
total is met for each one-year period.
- Cost of advertising borne by Nationwide. All
advertising undertaken by or through the Sales/Service
Centers pursuant to the terms of this Decree will be at
the expense of Nationwide and at no cost to its agents.
- Training By Nationwide
- Written notice of decree. Within 90 days following the
entry of this Consent Decree, Nationwide will send to
each of its officers, employees, and sales agents that
have any responsibilities relating to Nationwide's
homeowners insurance business, and through the sales
agents, their employees a letter or memorandum
informing them of the entry of this Decree and
containing the following:
- a statement that a copy of this Decree will be
provided at Nationwide's expense to any such
person who desires one;
- a statement that any breach of or failure to
comply with the requirements of this Decree will
subject them to dismissal, contract termination,
or other appropriate disciplinary action;
- a summary of the requirements of this Decree which
explains the employee's and/or agent's duties
under the decree;
- a summary of the employee's and/or agent's
obligations to provide homeowners insurance
without regard to the race, color, or national
origin of the homeowner or the neighborhood in
which the home is located;
- a statement that Nationwide cannot lawfully and
will not reprimand, penalize, or otherwise
retaliate in any way against any such person who
requests or provides information regarding
Nationwide's compliance with this Decree to the
United States Department of Justice or who opposes
such non-compliance; and
- a statement that it is Nationwide's management's
direction, intent and goal to better serve the
urban markets, and to grow market share of
homeowners policies sold in urban markets. Further
that Nationwide does not condone and specifically
prohibits any of its employees and/or agents to
take race or ethnicity into account in making
decisions about coverage availability, pricing or
services.
Nationwide will provide plaintiff with a copy of the letter.
Each person receiving the letter will sign and date a statement,
or in the alternative, will contact a toll free telephone number
provided by Nationwide, acknowledging that he or she has
received, read, understands, and will act in accordance
therewith. Nationwide will retain copies of all signed statements
and documentary evidence of all telephonic contacts at a central
location and will make them available to plaintiff upon request.
- Written notice to new employees and agents. Throughout
the life of this Decree, Nationwide will provide a copy
of the written notice described in the above paragraph
to each new employee hired or sales agent contracted
with, which have any duties relating to Nationwide's
homeowners insurance business, after the effective date
of this Decree, within thirty days after commencement
of the employment or agency relationship. Each such new
employee or agent shall sign and date a statement
acknowledging that he or she has received, read,
understands, and will act in accordance with the notice
letter, and all such signed statements will be retained
by Nationwide as indicated in the above paragraph.
- Company newsletters. Nationwide will provide compliance
updates periodically in company newsletters throughout
the term of this Consent Decree.
- Training by qualified organization
- General. Nationwide will contract with a qualified
organization approved by the United States to work with
Nationwide to develop a training program for all
employees and agents who have any responsibilities
relating to Nationwide's homeowners insurance business,
to inform them of the requirements to provide
homeowners insurance without regard to the race, color,
or national origin of the homeowner or the neighborhood
in which the home is located; Nationwide's goals and
policies regarding service to the minority community;
and the requirements of this Consent Decree. The
program will be developed and submitted to the United
States within 60 days after entry of this Decree.
- Training Sessions. Nationwide and the qualified
organization will work together to design a training
session which will be mandatory for all employees and
agents who have any responsibilities relating to
Nationwide's homeowners insurance business. The
training session may be conducted by such organization
and Nationwide jointly and will include instruction on
the following topics:
- the requirements to provide homeowners insurance
without regard to the race, color, or national
origin of the homeowner or the neighborhood in
which the home is located;
- the requirements of this Consent Decree;
- Nationwide's goals and policies regarding compliance with the Consent Decree and market
penetration into the minority community;
- the special insurance needs and problems of residents of lower-income, minority areas; and
- marketing, sales, and service to a racially diverse market.
- Training for new employees and agents. On at least an
annual basis during the term of this Consent Decree,
Nationwide shall conduct training sessions for all
employees and agents who have any responsibilities
relating to Nationwide's homeowners insurance business,
retained after the initial training sessions described
in this Section have been completed. The training
sessions for new employees and agents shall be
identical to the training sessions described above in
this Section.
- Development and implementation of testing program.
Nationwide will contract with a qualified organization
approved by the United States to develop and implement
a program to test for racial and national origin
discrimination in Nationwide's provision of homeowners
insurance. Such testing shall be conducted in ten (10)
cities per year during the life of this Decree. The
qualified organization will first submit a proposal to
Nationwide outlining the methodology, cost, and
approach to be used. The proposal will include a
sufficient number of tests in each city per year to
enable the parties to fairly assess compliance with
this Decree. Once the proposal is finalized and
accepted by Nationwide, and no later than 60 days after
entry of this Decree, Nationwide will submit the
proposal to the United States for its approval or
objection within thirty (30) days. Nationwide may
submit to the United States a proposal providing for
testing in fewer than ten cities per year, provided
that the testing proposal still fully meets the
remedial objectives of this Consent Decree. The United
States, approval shall not be unreasonably withheld. If
the United States objects to the proposal, the proposal
shall not be implemented and the parties will attempt
to resolve informally their disagreement. If the
parties have not resolved their differences within
thirty (30) days thereafter, the matter may be
submitted to the Court for resolution.
- Use of testing results. Nationwide will review the
testing results with the relevant individual employees
and sales agents and will use the results to determine
how to address any concerns with them and whether
changes in training, minority outreach or other
practices related to this Decree are necessary.
Nationwide will provide copies of all test results to
the United States. The tests are for self-monitoring
purposes only, will be kept confidential, and will not
be used by the United States in a lawsuit against
Nationwide, except that the parties may use and rely on
the testing results in any action taken to enforce the
terms and provisions of this Decree.
- Financial assistance for homebuyers. Over the six year
term of this Decree, Nationwide will provide a total of
$2.2 million per year to provide financial assistance
for low- and moderate-income homebuyers seeking to
purchase and/or repair single-family owner-occupied
homes in predominantly minority neighborhoods in at
least five but not more than ten of the following
metropolitan areas: Philadelphia, PA; Cleveland, OH;
Baltimore, MD; Louisville, KY; Richmond, VA;
Cincinnati, OH; Pittsburgh, PA; Atlanta, GA; Charlotte,
N.C.; Columbus, OH; Toledo, OH; Dallas-Fort Worth, TX;
Chicago, IL; Memphis, TN; and Indianapolis, IN. In the
event that during the term of this Decree, Nationwide
desires to change one or more of these cities due to
changed circumstances, Nationwide shall so notify the
United States.
The financial assistance program shall be administered in
each metropolitan area by either the Neighborhood Reinvestment
Corporation or the Local Initiative Support Corporation
(L.I.S.C.), or if neither of these groups has affiliates in that
area, then by the National Cooperative Bank Development
Corporation. The funds shall be used in each metropolitan area to
provide one or more of the following types of financial
assistance: downpayment assistance, closing cost assistance,
second mortgages, purchase/rehab loans, below market interest
rate loans, and homeownership counseling. The particular type of
assistance provided in each metropolitan area shall be chosen by
the administering organization based upon its experience in and
knowledge of the area, and its assessment of the types of
assistance which would best carry out the purposes of this
Consent Decree in that metropolitan area. These determinations
shall be subject to the approval cf the parties.
Six months after entry of this Decree and every six months
thereafter during the term of this Decree, each administering
organization shall submit a report to both Nationwide and the
United States detailing how the funds have been spent during that
reporting period in each metropolitan area.
- Notice of financial support. Local agencies and groups
distributing the community development funds provided
by Nationwide will notify recipients that Nationwide is
financially supporting the program, explain
Nationwide's program as described in this Consent
Decree, and provide recipients with the name, telephone
number, and address of the nearest Nationwide agent or
Sales/Service Center. Agencies and groups providing
this information will make it clear that recipients are
under no obligation to do business with Nationwide.
- Materials to be kept at a central location. To assist
all parties in monitoring the progress of Nationwide's
plan set out in this Decree, Nationwide shall maintain
the following records at a central location and shall
make such records available to the United States upon
request:
- Notices sent to present customers regarding their
opportunity to purchase replacement cost coverage
(see Section III.A.8) and notice letters sent to
rejected applicants (see Section III.A.7);
- Notice letters sent to agents pursuant to the second-tier review of rejected applications, along with all other information analyzed pursuant to
this review (see Section III.A.9);
- Notice letters sent to agents explaining Nationwide's desire to increase its agent presence
in targeted areas (see Section III.C.2), along with a record indicating when letters were sent
and who received them;
- Records of the number of new policies written in predominantly minority areas, including the name, address, and telephone number of the policyholder,
the type and amount of coverage, and the date the
policy was executed;
- Records of the numbber of new offices opened in predominantly minority areas, including the name, office address, and telephone number of the sales
agent(s), along with the date the office was opened;
- Records reflecting the location, opening date, staff, equipment, and budget of each Sales/Service
Center (see Section III.D);
- A log of outreach and public education events held or sponsored by Sales/Service Center staff (see Sections III.D.3 & III.E.7), as well as sample copies of notices sent by each Center pursuant to Section III.E.8;
- A sample paper, audio cassette, or videocassette copy (as appropriate) of each print, radio, or
television advertisement placed pursuant to Section III.E;
- Training letters sent to employees (Section IV.A.1 and IV.A.2), along with copies of signed acknowledgments and documentary evidence of telephone responses;
- Copies of each company newsletter which refers to the work described in this Decree (see Section IV.A.3);
- Records reflecting, for each training session held (see Sections IV.B.1, IV.B.2, and IV.B.3), the
date, location, name and title of trainer(s), topics covered, and written materials used;
- All records regarding testing conducted pursuant to this Decree (see Section V), including copies of the testing reports and any analyses thereof;
- Records identifying all homeowners insurance applications which were declined in whole or in part based upon the credit history of the insured, including the name(s)and address of the applicant(s), the address of the property to be insured, the type of insurance applied for, the
complete list of reasons why the application was denied, and the documents containing the credit information upon which the decision was based (see Section III.A.5). The United States certifies that the Department of Justice has complied and will comply with the Right to Financial Privacy Act, 12 U.S.C. §§ 3401, et seg.;
- Records of any oral or written complaint alleging that Nationwide has engaged in discrimination on the basis of race, color, or national origin in
the provision of homeowners insurance, including
full details of the complaint and any action taken
by Nationwide.
- Right of review and consultation. Wherever in this Decree Nationwide is required to make documents,
information, or a compliance plan available to the
United States, the United States shall have the right
to review such documents or information and object or
seek modifications on the grounds that Nationwide's
proposal will not achieve the objectives of this
Consent Decree. The parties will then attempt to
resolve informally the United States' objection. If the
parties cannot resolve their dispute within thirty (30)
days thereafter, they may bring it before the Court for
resolution.
- Progress reports. Six months after the effective date
of this Decree, and at the annual anniversary date of
the entry of this Decree, Nationwide shall submit to
the United States progress reports on the program
described in this Decree. Such reports shall contain:
- A paragraph-by-paracrraph evaluation of the
progress made with respect to Sections III through
VI of the decree, including an analysis of the
benefits to individuals in predominantly minority
communities; and
- Documentation sufficient to show Nationwide's submission of proposed business practice
modifications to state insurance regulatory
authorities and the states' actions thereon.
- Modification of decree. The parties agree that
flexibility will be required to achieve the goals of
the decree, and desire to resolve all disputes
regarding its implementation without resort to judicial
intervention. To this end, the parties agree that
particular terms of the decree may be modified upon
written agreement of the parties to be filed with the
Court. Further, any motion to modify the decree will
not be filed absent 45 days' notice to opposing
parties, during which time the parties are required to
make good faith efforts to resolve their disputes.
- The United States, claims against Nationwide. Entry of
this Decree will resolve all claims in the United
States' Complaint against Nationwide in this action
pursuant to the Fair Housing Act, 42 U.S.C. §§ 3601 et
seg., and all claims that could have been alleged by
the United States against Nationwide pursuant to 42
U.S.C. § 3614(a), based upon Nationwide's practices up
to and including the date of entry of this Decree.
Nothing in this Decree is intended to or does affect
any claims against Nationwide alleging violation of the
Fair Housing Act other than those claims of the United
States set forth above.
- Term of decree. This Consent Decree will become
effective upon entry by the Court. The Court will
retain jurisdiction of this case for at least six years
from the date of entry of the Consent Decree. At the
end of this time, the decree will expire and the Court
will dismiss the case with prejudice, unless the United
States petitions the Court to extend the term of the
decree. At least 45 days in advance of filing such a
petition, the United States will notify Nationwide,
which may file a response in opposition within 15 days
of the filing of the petition. The Court will extend
the decree and its jurisdiction if it has a reasonable
basis for concluding that the provisions of this Decree
have not been achieved, and that Nationwide has not
taken all reasonable steps under the decree to carry
out its terms.
SO ORDERED this ____[10th]_____ day of ___[March]___, 1997.
_______/s/__________________
UNITED STATES DISTRICT JUDGE
The Undersigned apply for and consent to the entry of this Order:
FOR THE UNITED STATES
THOMAS L. CRUMINE
Senior Vice President Proerty/Insurance
Nationwide Mutual Insurance Company and
Nationwide Mutual Fire Insurance Company
One Nationwide Plaza
Columbus, OH 43215
W. SIDNEY DRUEN
Senior Vice President and General Counsel
THOMAS W. DIETRICH (0015792)
Vice President and Associate General Counsel
DAVID L. WHITE
Counsel
Nationwide Mutual Insurance Company and
Nationwide Mutual Fire Insurance Company
One Nationwide Plaza
Columbus, OH 43215
(614) 249-7638
