Final answer:
Sherman should address the discriminatory advice from his colleague by either reporting it, consulting legal or ethics departments, or discussing the legal implications of insurance discrimination with the colleague. Refusing to offer insurance based on racial or ethnic makeup is illegal and constitutes discrimination.
Step-by-step explanation:
Sherman, the new agent, is faced with a suggestion from his senior colleague George, which implies a discriminatory practice in their insurance business. This is not just a moral issue but also a potential legal one, as discrimination in offering services could violate laws and regulations governing the insurance industry. In this situation, Sherman's choices include reporting George's advice to his superiors, consulting the company's legal or ethics department if one exists, or directly addressing his concerns with George and reminding him of the legal implications of insurance redlining or any form of discrimination.
An insurance company may choose to avoid selling policies in markets with high adverse selection risks, where the proportion of high-risk individuals in the population is greater or known to be greater by those individuals themselves. However, refusing to service an area based on ethnic or racial makeup of the population, rather than on objective risk analysis, constitutes discrimination and is illegal. The issue is compounded when systemic housing segregation practices are factored in, which have historically impeded certain ethnic groups from purchasing homes outside certain neighborhoods.