(Article from Insurance Law Alert, February 2025)
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In 2013, the National Association of Mutual Insurance Companies (“NAMIC”) filed suit against the United States Department of Housing and Urban Development (“HUD”) in a federal district court in Washington, D.C. The suit centered on a disparate impact rule that was implemented by HUD in 2013. That rule became the subjected of protracted litigation for the next decade and was ultimately finalized in 2023 under the Biden administration. The rule interpreted the Fair Housing Act of 1968 to ban not only intentional discrimination, but also underwriting practices of insurers that disparately impact customers based on race, ethnicity or other protected categories (and which are not based on legitimate risk-related considerations). NAMIC alleged that the rule was unlawful as applied to the ratemaking and underwriting practices of homeowners’ insurers.
The litigation was stayed in 2020 under the first Trump administration, but after the final 2023 FHA rule reinstated the original 2013 disparate impact standard, a federal district judge ruled in favor of HUD. NAMIC appealed the decision, arguing that enforcement of the rule would impose enormous burdens on property insurers and result in an avalanche of litigation against insurers based on legitimate practices that are, in some cases, mandated by state regulations.
Last month, HUD filed an unopposed motion to hold the appeal in abeyance. The motion, which cited “the recent change in administration on January 20, 2025,” indicated that reconsideration of the rule was likely and could obviate the need for judicial review of the pending appeal. National Association of Mutual Insurance Companies v. United States Department of Housing and Urban Development, No. 23-5275 (D.C. Cir. Jan. 31, 2025).
We will keep you posted on further developments relating to this matter.