The Bronx Is Burning: Urban Disinvestment Effects of the Fair Access to Insurance Requirements

Ingrid Gould Ellen, Daniel Hartley, Jeffrey Lin and Wei You ()

No 25-16, Working Papers from Federal Reserve Bank of Philadelphia

Abstract: We study the unintended effects of Fair Access to Insurance Requirements (FAIR) plans developed by 26 states in the 1960s to address insurance redlining in urban neighborhoods. FAIR plans’ problematic features included prohibitions on considering environmental hazards in underwriting, mandatory insurer participation that diluted underwriting incentives, and payouts exceeding market values in declining areas. Using a triple-difference design comparing pre/post-FAIR periods, neighborhoods with/without likely FAIR access, and participating/nonparticipating states, we find that FAIR inadvertently led to significant housing disinvestment and accelerated declines in neighborhood population and income, with simultaneous increases in the Black population share.

Keywords: Arson; Housing disinvestment; Moral hazard; Neighborhoods; Property Insurance (search for similar items in EconPapers)
JEL-codes: G52 N92 R31 (search for similar items in EconPapers)
Pages: 53
Date: 2025-05-19
New Economics Papers: this item is included in nep-his
Note: Supersedes Federal Reserve Bank of Chicago Working Paper #2024-25
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Working Paper: The Bronx is Burning: Urban Disinvestment Effects of the Fair Access to Insurance Requirements (2024)
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DOI: 10.21799/frbp.wp.2025.16

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