Despite the McCarran-Ferguson Act, which reserved the regulation of the “business of insurance” to the states, the Department of Housing and Urban Development (HUD) has given itself the ability to upset and invalidate long-standing underwriting and ratemaking practices for homeowners insurance.

Executive Summary

Representatives of Nelson Levine de Luca & Hamilton argue that a new HUD rule, which the federal agency contends merely "formalizes its long-held recognition of discriminatory effects liability under the Fair Housing Act," actually could negate more than 150 years of state-based regulation of insurance and eliminate risk-based pricing for homeowners insurance.

Earlier this year, HUD promulgated a rule that could effectively permit it to negate more than 150 years of public policy, regulatory principles, actuarial standards, and state-based regulation of insurance and eliminate risk-based pricing for homeowners insurance.

The new rule (24 C.F.R. 100.500) establishes a process for determining liability under the Fair Housing Act (FHA) when a housing-related practice has a discriminatory effect even though there may be no intent to discriminate.

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