Analysis of Effects of Race on Insurance Companies’ Operations in Chicago, December 1977 ~ November 1978

Abstract

Dataset Chicago is about the residential fire insurance policies issued in Chicago over December 1977 through February 1978; categorized as either voluntary, or involuntary, which includes state-offered Fair Access to Insurance Requirement (FAIR) 1 plans (Wriggins 2010) for people who would be denied insurance because of high risk classification, after Fair Housing Act (FHA) has been in act since 1968 2 (Calmore 1997). Main purpose of this article is to explore the relationship between insurance activity and the variable race by S-Plus, rather than numerical methods such as risk theory models. The final result proves insurance companies were using race as a determinative factor of underwriting insurance contacts, but not the only determinative factor. Data size is relatively small as n = 47 Zip codes. Theft, fire and the age of the house are also provided, along with the median income on the size of the expected loss and insolvency.