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New Insurance Redlining Law Seen ByLocal Lfiadprs As A No-Gain Pronositinn for P^nnUunBY JEAN STERNL1GHTThe newly enacted state insurance legislation is described by Tim O'Hanlon, project coordinator for South Brooklyn Against Investment Discrimination (AID) as %u201c measured more to meet the needs of insurance companies\meet the needs of the consumers. In terms of AID's goal of getting insurance companies themselves to provide adequate insurance, \haven't gained anything\pasage of the new law, said O'Hanlon.The bill which was signed intolaw on July 1 by Governor Carey will provide New York State participants in the Fair Access Insurance Requirement (FAIR) plan with lower policy rates. Policy holders who previously paid between 250 and 500% more than the price offered in the private market, can now be charged no more than 20 to 40% above the private rates.According to the %u201c Holtzman Amendment\in October of 1978, states which do not bring their FAIR rates down to the level of private rates will no lorger be allowed to participate inthe Federal Riot Reinsurance program. Earlier this year New York State lost its federal reinsurance because the legislature failed to act, thus becoming the only major urban state which has failed to pass the \With the new law still not requiring equalization of rates. New York State insurance companies are not eligible to reapply for the uncancellablc federal insurance which is designed to protect insurance companies from catastrophic losses due to riots or civil disorders such as the 1977 blackrn m %u25a0 iout.FAIR programs were brought into being in 1968 by the passage of a federal law requiring each state to make sure that people in riot-torn areas could obtain propetv insurance. The program now provides insurance to victims of insurance redlining. People who have unsuccessfully tried to obtain insurance from several private companies can appeal to FAIR as the insuror of last resort. O'Hanlon argues that even though FAIR rates will now' be much reduced from their formal levels, the newv %u25a0 % %u25a0 j f %u25a0 %u25a0legislation is still a victory for the insurance companies because it keeps FAIR rates from being competitive.Since they no longer qualify for federal riot reinsurance, New York State Insurance Companies will now have to turn to private sources which arc but6 more costly and cancellable. This may cause an increase in New York State overall insurance rates.' n%u25a0 m iip iW H W H gm '\\ N Mw&ssm:i jJS': H i%u25a0Mr i%u25a0 ^ %u25a0Hr?*m m - * *. 'Tigy