Chicago insurance redlining 

Description (source: Andrews and Herzberg (1985))

Several communities in Chicago claimed that insurance companies 
were redlining their neighborhoods. 
(Redlining = canceling insurance policies or refusing to renew)


In a study of insurance availability in Chicago, the U.S. Commission on Civil Rights 
attempted to examine charges by several community organizations 
that insurance companies were redlining their neighborhoods, 
i.e. canceling policies or refusing to insure or renew. 

First the Illinois Department of Insurance provided the number of cancellations, 
non-renewals, new policies, and renewals of homeowners and residential fire insurance 
policies by ZIP code for the months of December 1977 through February 1978. 
The companies that provided this information account for more than 70% of the homeowners 
insurance policies written in the City of Chicago. 
The department also supplied the number of FAIR plan policies written an renewed in Chicago 
by zip code for the months of December 1977 through May 1978. Since most FAIR plan 
policyholders secure such coverage only after they have been rejected by the voluntary market, 
rather than as a result of a preference for that type of insurance, 
the distribution of FAIR plan policies is another measure of insurance availability in the voluntary market.

Secondly, the Chicago Police Department provided crime data, by beat, on all thefts for 
the year 1975. Most Insurance companies claim to base their underwriting activities on loss 
data from the preceding years, i.e. a 2-3 year lag seems reasonable for analysis purposes. 
The Chicago Fire Department provided similar data on fires occurring during 1975. 
These fire and theft data were organized by zip code.

Finally the US Bureau of the census supplied data on racial composition, income and age 
and value of residential units for each ZIP code in Chicago. 

To adjust for these differences in the populations size associated with different ZIP code areas, 
the theft data were expressed as incidents per 1,000 population and the fire and 
insurance data as incidents per 100 housing units.


The variables are

     zipcode:
     race: racial composition in percent minority
     fire: fires per 100 housing units in 1975
     theft: theft per 1000 population in 1975
     age: percent of housing units built before 1939
     vol : new homeowner policies plus renewals minus cancellations and non renewals 
           per 100 housing units
     invol: new FAIR plan policies and renewals per 100 housing units
     income: median family income