HUD Re-Releases 2013 Disparate Impact Rule

The Department of Housing and Urban Development announced March 17 that it has submitted to the Federal Register for publication a final rule restoring the 2013 discriminatory effects rule. The final rule will go into effect 30 days after it is published in the Federal Register, although HUD acknowledges that the 2013 rule – which has been in place for nearly a decade – has been and is currently still in effect.

NAMIC has led the opposition to this rule and the 2013 rule for almost a decade. While NAMIC and its member companies vehemently oppose illegal discrimination, this rule is not supported by any existing cases, is duplicative of current state prohibitions, ignores the basic mechanics of pricing and providing insurance, and would seriously disrupt the ability of property/casualty insurance companies to assign risk on objective and relevant factors.

The rule would impose liability where there is no intent to illegally discriminate, and where all policyholders and applicants for insurance were subjected to the same underwriting and pricing criteria without regard to race, ethnicity, or any other prohibited characteristic. HUD has never provided a need for this rule, as unfair discrimination issues relating to insurance have been well addressed by state regulators. Federal law has established insurance regulation under the jurisdiction of the states.

NAMIC has a pending motion for summary judgment opposing the 2013 rule under consideration by the District Court for the District of Columbia, and its reinstatement under the new final rule will enable the court to rule on our motion.

NAMIC and outside counsel are reviewing the 184-page rule and explanation and considering how the rule and its administrative rulemaking record might impact our litigation.

NAMIC will continue to contest this unwarranted and unnecessary rule. Any questions or comments on the rule, the process, or the litigation strategy should be sent to Tom Karol, NAMIC’s general counsel – federal.