Government mandates have increased the cost and limited the availability of health insurance, says insurance expert Michael Harrold, and they can do the same for homeowner's insurance.

The National Association of Insurance Commissioners (NAIC), an influential group of state regulators, is working on model legislation to prohibit discrimination against victims of domestic violence in the provision of homeowner's and other types of property and casualty insurance.

Unlike most state laws -- which simply say victims of abuse cannot be singled out but can be held to the same standards as everybody else -- the NAIC draft law would create a special class of insureds. Abuse victims could not be denied coverage, have their premiums raised, their policies canceled or their claims denied if any of the information or conditions that triggered such actions could be deemed abuse-related.

Although property and casualty insurers don't now collect the kind of information that would allow them to identify claims resulting from domestic violence, implementing regulations could require them to collect such data in order to show they aren't discriminating.

Insurance is a way to pool known risks, says Harrold, and has always entailed discrimination. For instance, a person can be denied insurance if his past claims history is determined to pose too high a risk; premiums can be raised if increased claims activity indicate he or she is a higher risk than previously determined; or an insurance policy can be canceled due to the frequency and severity of claims.

But under the rules that abuse victims' groups are urging the NAIC to adopt, the same standards used to make such decisions about other policyholders would be unlawful discrimination if applied to a victim of abuse.

Past surveys of life, health and accident insurers found that one-quarter of them used domestic violence as a criterion in issuing or renewing those types of insurance policies.

But the only formal survey on abuse victims that included property and casualty insurers -- in 1996 by the Oregon Insurance Department -- found that none of them used an individual's domestic abuse victim status as a factor in the marketing, rating or underwriting of any insurance policy.

Legislation similar to the NAIC draft model law is being debated in many state legislatures and has been introduced in the U.S. Congress by Sen. Paul Wellstone (D-MN) and Rep. Bernard Sanders (I-VT).

Sources: Michael Harrold, "Alice in Insuranceland: The NAIC's Model Law on Domestic Abuse," Issue Analysis Number 58, August 12, 1997, and Leah Braesch and Michael Harrold, "Risky Business: Insurance, Risk Classification and the Consumer," Capitol Comment No. 162, June 25, 1997, Citizens for a Sound Economy Foundation, 1250 H Street, NW, Washington, DC 20004, (202) 783-3870.