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Nationwide settles case
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March 10, 1997: 6:14 p.m. ET
Insurance giant, Justice reach agreement on redlining accusations
From Correspondent Kelli Arena
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WASHINGTON (CNNfn) - Facing charges of racial discrimination, Nationwide Insurance Co. Monday reached a settlement with the U.S. Justice Department.
The government had accused Nationwide of redlining, or using the location in which some people lived to deny them insurance coverage.
As part of the settlement, which the government said was the largest under the Federal Fair Housing Act, the nation's fifth-largest home-insurer will invest some $13 million in several inner-city neighborhoods.
"It will create more opportunities for the company and will help more minorities in their quest to own their own home," said U.S. Attorney General Janet Reno.
The company said the deal formalizes a plan it had already set in motion to help it expand in urban markets.
Richard Crabtree, Nationwide's president, said the company did not act improperly or illegally.
"Certainly we do not believe we committed any illegal acts nor did our employees or agents. We have not been able to discover (anything) through extensive investigation internally," he said.
The agreement requires Nationwide to provide equal access. It will also invest more than $13 million over six years in predominantly minority neighborhoods.
Despite the investment commitment, the plan is a disappointment to Shanna Smith of the National Fair Housing Alliance who says it won't dissuade Nationwide from discriminating. (215K WAV) or (215K AIFF)
Redlining is hardly a new problem for the insurance industry. State Farm, Allstate and American Family Insurance have all reached similar agreements with the government.
Nationwide still faces an array of lawsuits in six states. With the Nationwide settlement, the Justice Department is hoping the business built on risk will now consider discrimination a risk not worth taking.
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