Insurance is a mechanism for reducing financial risk and spreading financial loss; it is a major social institution that is essential to the functioning of virtually any type of modern economy. In terms of economic importance, particularly in capitalist-oriented economies, the mortgage-lending process is another major social institution, ensuring that individuals and businesses with limited financial resources can aspire to, and acquire, property for the purpose of domicile or enterprise. Insurance and mortgage-lending engage a society on two levels: the economic and, by extension, the social spheres of activity. In so becoming such broad-based participants in the community, they step into that grey area of activity where business and social goals co-exist - sometimes in cooperation, sometimes in conflict. In a classless society such as the United States purports to be, it is in the area of racial and ethnic discrimination that most conflicts between business goals and social goals come to a head. This paper will examine one of the discrimination issues involving insurance and mortgage-lending: "redlining."
The purpose of this paper will not be to take sides. Rather, by breaking down the issue of redlining into separate areas of consideration, it is hoped that a better understanding of the matter will ensue. There will be four areas of consideration: Business, Public Policy, Legal, and Ethical. As with the activities of insurance and mortgage-lending themselves, these areas overlap one another. Indeed, the biggest obstacle to communication among the conflicting parties is that they often do not realize when they are arguing from different starting points.
As will be seen later in this paper, when matters of anti-discrimination polity were first proposed in the late 1950s/early 1960s, more than one jurisprudence theorist noted that the debate was flawed from the legal standpoint. "Legal" dialectic in favor of anti-...