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

Ellen, Ingrid Gould; Hartley, Daniel; Lin, Jeffrey; You, Wei

doi:10.21799/frbp.wp.2025.16

Working Paper

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

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.

JEL Classification: G52; N92; R31;

https://doi.org/10.21799/frbp.wp.2025.16