FOR IMMEDIATE RELEASE                                          CR
THURSDAY, MARCH 30, 1995                           (202) 616-2765
                                               TDD (202) 514-1888


    JUSTICE DEPARTMENT OBTAINS $16 MILLION SETTLEMENT AGAINST
          AMERICAN FAMILY MUTUAL INSURANCE FOR ALLEGEDLY
            REFUSING TO INSURE AFRICAN AMERICAN HOMES


 FIRST SUIT UNDER THE FAIR HOUSING ACT AGAINST INSURANCE COMPANY


     WASHINGTON, D.C. --  In the first Justice Department action
against an insurance company under the federal Fair Housing Act,
American Family Mutual Insurance Company has agreed to pay over
$16 million for allegedly providing blacks with inferior policies
than those offered to whites and in some cases for simply
refusing to insure homes of African Americans.
     "When property is not insured, homes cannot be rebuilt,
neighborhoods deteriorate, and communities suffer," said Attorney
General Janet Reno.  "All of Milwaukee benefits from today's
actions by American Family."
     Under the agreement between the Justice Department, American
Family and a group of private plaintiffs, the company has agreed
not to discriminate based on race and to pay over $14 million in
damages to compensate the victims of the company's discriminatory
policies and an additional amount in attorneys fees.  It also has
agreed to advertise in media that targets African Americans and
inspect homes in African American neighborhoods on an equal basis
as in white neighborhoods.
     "Today's agreement ensures that African Americans will be
part of the American Family," stated Reno.  "We commend the
company for recognizing the need to service the entire community,
taking steps to compensate victims of its past actions, and
ensuring that all citizens of Milwaukee have a chance to receive
quality insurance for their homes."
     In a complaint filed together with the agreement, the
Justice Department charged the company with engaging in a pattern
of discrimination by using race as a factor in determining
whether to grant homeowner insurance policies in the Milwaukee
metropolitan area.
     "Risk discrimination is permitted, race discrimination is
not," added Reno.  
     The complaint, filed with the agreement today in U.S.
District Court in Milwaukee alleged that employees of American
Family at one time:
    gave explicit instructions to agents and underwriters to
     consider race in deciding whether, and on what terms, to
     offer homeowners insurance; 

    required agents and underwriters to consider race as a
     factor in deciding whether to inspect a home -- the results
     of which were used to deny coverage in some cases; 

    overlooked deficiencies in conditions of homes in white
     neighborhoods that were used to deny coverage in black
     neighborhoods;

    made disparaging and stereotypical references about African
     Americans as being poor insurance risks; and,

    criticized agents, including African American agents, who
     sought to do business in the African American community, and
     discouraged them from doing such business.

     "We are persuaded by the evidence that American Family
discriminated in the past," said Assistant Attorney General for
Civil Rights Deval L. Patrick.  "By entering this agreement,
American Family has turned a new page." 
     The Justice Department first started to investigate the
company in 1988 after receiving numerous complaints about
American Family's discriminatory behavior.  The investigation in
part revealed that African American homeowners disproportionately
received inferior, more costly "repair cost" policies while white
homeowners with similar risk assessments were provided the more
favorable "replacement cost" policies.  
     The investigation also showed that blacks were forced to
submit to inspections more often than whites and that agents
failed to return calls from black customers and refused to keep
appointments.
     As a result of the alleged discriminatory practices, the
company insured a significantly lower percentage of homes in the
predominantly black neighborhoods than in comparable white
neighborhoods.  Even after accounting for various socioeconomic
factors, the Justice Department's investigation revealed that the
differences could not be explained by non-racial factors or any
actuarial data.
     The agreement also provides that the company will issue a
non-discrimination statement, continue to recruit qualified
prospective customers from the state's insurance plan, conduct
random testing, no longer exclude homes solely on the basis of
the age or sales price of the home, and provide a new custom
value policy that will make replacement cost-type coverage more
widely available.
     "Today's agreement will benefit the private plaintiffs whose
civil rights have been vindicated and the people of Milwaukee who
will have greater opportunities for decent and affordable housing
without regard to race." said U.S. Attorney Thomas Schneider of
Milwaukee.  "American Family has taken the lead by recognizing
past problems, finding ways to provide greater protection for all
homeowners, and taking steps to expand its own business
opportunities."
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