New York’s top court has ordered the release of insurance company reports showing automobile policies broken down by zip code so Brooklyn officials can determine whether neighborhoods were deemed high-risk and avoided through “redlining.”
The Court of Appeals concluded that while the state Insurance Department withheld that information because of the companies’ competitive concerns, the insurers failed to make the case they’d be hurt, according to the ruling. Four companies filed affidavits against disclosure.
“The insurers’ key argument is that if they are forced to reveal zip codes of areas where relatively few policies are issued, competitors could use this information to exploit an insurer’s geographic weakspot,” Judge Eugene Pigott Jr. wrote. “It has not been shown that zip code data, without more, would necessarily put the insurer at a competitive disadvantage.”
Chief Judge Judith Kaye and judges Carmen Beauchamp Ciparick, Victoria Graffeo, Susan Read and Theodore Jones Jr. agreed.
The company reports are required under a 1979 state law and subsequent regulation meant to prohibit redlining, the practice of declining coverage “based solely on the geographical location of the risk.”
Insurers must file annual reports listing by zip code the policies they issue, renew or cancel for reasons besides nonpayment of premiums, as well as applications they reject. The regulation says each report “shall be a public record.”
The court majority said despite that language, insurers retain the right under the state’s Freedom of Information Law to assert that certain reports should be kept confidential because they constitute either trade secrets or “would cause substantial injury to the competitive position” of a company.
In a separate opinion, Judge Robert Smith said the insurers’ reports, like deeds, are presumptively public records and should be available without having to resort to a FOIL request. But if covered by FOIL, the insurers had persuasively shown likely competitive injury to justify keeping them secret, with the reports revealing local market shares, changes and strategies, he wrote.
“I read the regulation as a policy determination of the Insurance Department, acting under the authority given it by the anti-redlining statute, that the reasons for making this information public outweigh the insurers’ legitimate reasons for keeping it confidential,” Smith wrote. He said FOIL shouldn’t apply in this case and offered the general criticism that such requests are addressed by state agency officials “often in cumbersome and time-consuming fashion.”
Brooklyn Borough President Marty Markowitz filed two FOIL requests in 2004 for the reports covering each Kings County zip code from 1999 through 2002. The insurance department gave him overall data for auto policies, but refused to detail them by company. He sued. A trial court agreed with Markowitz, a midlevel appeals court reversed, and the top court sided Thursday with Brooklyn officials.
“We are reviewing the ruling and fully intend to comply,” Insurance Department spokesman Andrew Mais said Friday. The department has taken no formal enforcement actions against insurers since 1979 for redlining, he said.
Markowitz said the decision upholds the right of Brooklynites and all New Yorkers “to know if they’re being taken advantage of by auto insurers. Insurance companies need to be held accountable, and drivers rightfully expect government to investigate potential redlining and other wrongdoing and to provide protection if needed,” he said.
In a 2004 report on Brooklyn’s high auto insurance rates, a task force identified fraudulent claims as one factor and called for preventing insurers from using a driver’s zip code in determining cost.
Joe Quijano, spokesman for State Farm Insurance, which filed affidavits in the case, said the company views its reports with the state as trade secrets, adding they don’t engage in redlining, either excluding areas from coverage or hiking premiums just based on geography. “That is nothing that we practice,” he said.
“That information at most is going to show where an insurer has been successful in writing policies,” Quijano said. “A competitor could come in and see where we’ve been successful and change their marketing plan to mirror ours.”