Industry Issues | ERM & Emerging Risks

Emerging Risk – Disparate Impact

Disparate Impact is a legal theory to establish liability under discrimination laws without evidence of intentional or circumstantial discrimination. To prove disparate impact, government or a private litigant may demonstrate through statistics that a neutral business practice, implemented with no discriminatory intent, has a disproportionately adverse effect on a protected class.

HUD Disparate Impact Rule - UPDATE

PCI continues its work to generate stakeholder comments in opposition to HUD's disparate impact rule during HUD's open comment period on the Advance Notice of Proposed Rulemaking (ANPR) titled Reconsideration of HUD's Implementation of the Fair Housing Act's Disparate Impact StandardOver 200 comment letters highlighting concerns about the rule's impact on the state-based insurance system and insurance consumers have been sent to HUD through PCI's grassroots portal. The comment period closes on August 20.  

PCI was pleased when HUD Secretary Carson was asked at a House Financial Services Committee hearing whether HUD has the authority under McCarran Ferguson to regulate insurance and the Secretary responded "that is not HUD's business." 

To date, over a thousand comments have been submitted in response to HUD's ANPROf that number, 136 have been posted to the "Docket Folder" and are available to the public. 67 posted comments request that the disparate impact rule be modified to conform to the limitations on disparate impact liability set forth in the Inclusive Communities case; 51 published comments request that the disparate impact rule be repealed or that it include an exemption or safe harbor for homeowners insurers; 11 comments request that the disparate impact rule remain unchanged; and, comments in 7 posted don't neatly fit into any of these categories.  

Several Insurers and numerous insurance agents have requested an exemption or safe harbor for homeowners insurers. State insurance commissioners are weighing in, requesting that the disparate impact rule be modified to exempt homeowners insurers.