What impact do Fair Chance in Housing Acts being considered around the country have on insurance rates? This is a far more nuanced question than one might otherwise believe at first glance, encompassing politics, economics, social compassion, ethics, and insurance.
The Fair Chance in Housing Acts are a hybrid of the Fair Chance in Employment Acts already existing at the federal level as well as in numerous jurisdictions at state and local levels across the United States. A Fair Chance in Employment Act is intended to help those who have “paid” for prior criminal offenses to have a better opportunity to overcome those prior actions and become contributing members of society rather than becoming stigmatized and unable to be employed.
The various Fair Chance employment acts are generally consistent. They prohibit employers who are encompassed within the Act from asking the job applicant about criminal convictions before making an employment offer. The rationale offered for the laws is straightforward. Employment decisions about an equally qualified job applicant should not be premised upon crimes for which that applicant has already paid. In addition to that rationale, there is an assumption that those who have been convicted of a crime, and can be gainfully employed, will be less likely to commit another crime than those who committed a crime and cannot get a job because of their prior conviction. In short, one who seeks to better themselves by becoming employed and contributing to society should not be impeded in job searches due to criminal acts that have already been repaid.
The Fair Chance in Housing Act arguably entails a more complicated analysis. The general premise is essentially the same: Those seeking housing should not have housing decisions made against them due to crimes for which they have already repaid society. In addition, this premise operates under the assumption that those who have stable housing will be less likely to commit future crimes than those who cannot obtain housing due to earlier convictions.
The difference between employment and housing is that housing risks over an entire day, every day, are more encompassing, and the potential victim pool is much broader than risks created by Fair Chance in Employment Acts during work hours at a workplace. Risks in housing extend to other tenants, some of whom may likely include single parents, guests, the weak or homebound, children, and others less able to protect themselves over a 24-hour period rather than just during a job shift as involved with Fair Chance in Employment Acts. For the ethicist, the question in housing is whether the benefit to those seeking a second chance outweighs the increased risk to those without criminal conviction histories.
Obviously, significant societal determinations, far beyond the point of this article, exist in the determination of whether a community should, by law, afford a “fair chance in housing” to those who have already paid for their acts. A more secondary analysis relative to the many ethical considerations involved in the establishment of Fair Chance in Housing laws is insurance. Insurance is, very simply stated, a contract of an insurer by which the insured receives financial protection or reimbursement against certain losses, not otherwise excluded or limited by the insurance contract. The cost of the insurance, even its issuance at all, is based upon risk and uncertainty. Risk and uncertainty are answered by available information and data, frequently based upon long experience, history, and large data bases. The insurance premium is the price which the insurer is willing to accept in return for assuming the risk the insured seeks to avoid.
Does data indicate that risk of repeated criminal acts by a tenant is higher than risk of a criminal act from one who has not committed a crime in the past? If that is so, the financial cost for obtaining insurance by landlords will increase because the risk to the insurer increases. If the cost of insurance rises for landlords, higher rents to tenants almost certainly will follow due to the landlords’ higher insurance premiums. Perhaps less obvious is that if that risk increases the cost of insurance to landlords, it will almost certainly also increase the cost of insurance for tenants who seek insurance coverage on their own living premises.
Could the rise in rent and insurance cost to those who have not committed a crime push them out of the housing? If so, does the risk of crime committed by individuals pushed out of their housing due to higher cost then increase? Are there perhaps certain prior crimes that do not increase insurance and rent as much as other crimes? Are such determinations (and others) even being considered by government officials who seek to give those convicted of crimes a second chance?
We should want others to be successful and to be able to overcome past mistakes. The point of this article is not to advocate for, or against, Fair Chance Acts. The point of this article is to suggest that a number of variables, even as mundane as insurance premiums and insurance coverage, are impacted by laudable social goals. In attempting to help others, we should be cautious not to create negative unintended consequences, creating a worse situation for others, particularly if the efficacy of the implemented measures is not supported by data. If such data exists, it should be shared so that society can feel comfortable working towards that common goal to make our communities better.
If you have any further questions regarding insurance, please contact Marc Dedman.