Car insurance in Detroit continues to be a racket.

[EastsideAl]

I paid less than half what I pay in Detroit back when I lived in the ghetto in Brooklyn, where the streets were covered with broken auto glass every morning. Since returning to the eastside of Detroit I have had my car broken into exactly once [[and that was directly in front of the Main Library and the DIA, and I didn't make a claim on it), and have continued my 20+ year record of no tickets and no accidents.

But I'm still paying about 3 times as much on pretty much the same car [[old Ford Focus) as my cousin who lives a couple of miles away in GP and has his car broken into twice, once stolen right out of his driveway, and otherwise drives a lot of the time like the drunken maniac he is. So, yes, I think it's a racket, and yet another example of how the rest of the state has basically decided that we're not a part of them, and they and the companies they supposedly "regulate" can shit on our heads whenever they feel like it, and then just say something like "hey, it's Detroit, what do you expect?".

[313WX]

According to "yours truly" out of Grand Rapids, you can blame Obama for your ridiculous car insurance rates, not the city or state's incompetent leadership.

The state of Michigan has the highest car insurance costs of any US state. So it's not just a Detroit problem, and it shouldn't require JUST a solution OUT OF Detroit.

http://www.eclectablog.com/2014/01/t...nce-rates.html

[motz]

Get rid of No Fault Insurance and the rates will go down.

Yep and these mortgage backed securities are a great idea for an investment. Have you heard of snake oil? It'll cure your cancer!

Same old song and dance. They want to lower their overhead, but will it actually affect our rates? I really, strongly doubt that. They'll say "OH POT HOLES ARE REAL BAD THIS YEAR, RATES STAY HIGH " We shouldn't give in to the insurance company's scams, and instead hold the flame to their feet and demand action through our inspector general-types who oversee these insurance companies.

[mwilbert]

If the market is that unregulated and rates are too high based on perceived exposure so that companies writing in Detroit are making obscene profits, there would be a lot of other insurance companies coming into the market to undercut those profits.

This is true in theory, but in practice there are at least a couple other possibilities that spring to mind. One is collusion. Another is that the other companies don't know how profitable the Detroit market actually is--insurance companies don't have to report their profits by individual city, so insurance companies not currently doing business in Detroit don't have the data to determine how profitable it might be.

[EastsideAl]

Insurance a racket? Is a Casino a racket? Are Interest rate swaps a racket?

Interesting that you start off your argument by citing two of the biggest sucker rackets out there - where the house constantly tweaks the odds to assure that they almost always win.

[downtownguy]

This is true in theory, but in practice there are at least a couple other possibilities that spring to mind. One is collusion. Another is that the other companies don't know how profitable the Detroit market actually is--insurance companies don't have to report their profits by individual city, so insurance companies not currently doing business in Detroit don't have the data to determine how profitable it might be.

When esurance was relatively new, I saved about $1,000/year by going with them. That was when they had no local presence and you bought your policy over the internet. Then they were acquired by Allstate, and the rate savings disappeared. Go figure.

[motz]

When esurance was relatively new, I saved about $1,000/year by going with them. That was when they had no local presence and you bought your policy over the internet. Then they were acquired by Allstate, and the rate savings disappeared. Go figure.

Do we notice a trend here? The big players are setting rates at astronomical levels and most others seem to be following... collusion is a huge issue that needs to be addressed, but the insurance lobby and state repubs are basically best friends, so....

[Wesley Mouch]

It makes no sense that insurance companies would set rates this high just to abuse Detroiters and make profit. Blaming the big, bad wolf here distracts from the needed insurance reform that will really deliver savings.

I do hope Duggan continues to push his idea. Fixing car insurance in Detroit is a crucial step -- and one that the EFM isn't going to address. Go Mayor Mike!

[motz]

It makes no sense that insurance companies would set rates this high just to abuse Detroiters and make profit. Blaming the big, bad wolf here distracts from the needed insurance reform that will really deliver savings.

I do hope Duggan continues to push his idea. Fixing car insurance in Detroit is a crucial step -- and one that the EFM isn't going to address. Go Mayor Mike!

Except that the insurance companies are using those profits to lobby politicians to allow for them to continue practicing abusive business tactics, using bullstuff math to come up with completely unrealistic formulas because "Detroit". We need to place blame on those abusing the lack of regulation, as well as call for needed reforms to get this stuff straight. We can do two things at once

[coracle]

Maybe they've found out we're suberb drivers in the suburbs so they give us a break because they make lots of profit off us.

[Dan Wesson]

Interesting that you start off your argument by citing two of the biggest sucker rackets out there - where the house constantly tweaks the odds to assure that they almost always win.

Probably the point I was trying to make is a Racket is considered by TPTB to be an illegal enterprise.

Insurance, Casino's, Wall Street derivatives while not morally correct are legal thanks to the best government money can buy.

[evergreen]

Don't hold your breath waiting for the City to provide auto insurance. It can scarcely manage to perform basic municipal services such as light the streets and provide timely police presence.

Detroit is caught between two hammers: the nation's most comprehensive mandatory no fault coverage and an astronomical rate of car theft. I know people who weren't allowed to keep their new car for 48 hours before thieves removed it from their driveway.

In addition, the high unemployment rate means you have a large "litigation ready" population. By "litigation ready" i mean they have no daily or regularly documented activities which would contradict a claim of severe disability.

Insurance is among the most highly regulated businesses in the state. If it were just a matter of reducing the racket part down to acceptable levels, surely all the brilliant minds in Detroit [[hollowell etc) would have been able to do that. There's much more to it than that.

[jt1]

Insurance is among the most highly regulated businesses in the state.

Please elaborate using facts to support this statement

[evergreen]

Good point. Please see shavers v attorney General 402 mich 559 for a fairly detailed but accessible discussion of the rate making process.

[softailrider]

Don't hold your breath waiting for the City to provide auto insurance. It can scarcely manage to perform basic municipal services such as light the streets and provide timely police presence.

Detroit is caught between two hammers: the nation's most comprehensive mandatory no fault coverage and an astronomical rate of car theft. I know people who weren't allowed to keep their new car for 48 hours before thieves removed it from their driveway.

In addition, the high unemployment rate means you have a large "litigation ready" population. By "litigation ready" i mean they have no daily or regularly documented activities which would contradict a claim of severe disability.

Insurance is among the most highly regulated businesses in the state. If it were just a matter of reducing the racket part down to acceptable levels, surely all the brilliant minds in Detroit [[hollowell etc) would have been able to do that. There's much more to it than that.

Regulated totally on the side of the insurance company's is what you should have added to your last paragraph. If any insurance matter makes it to the Michigan Supreme Court the rulings always favor the insurance companies not the consumer. After all, who's money got those members elected?

[noise]

When I moved out of state, my auto insurance decreased by about 2/3. And when I was last living in MI, I lived in a small town [[about 1,500 people) about an hour from Detroit.

[MizMotown]

What I really don't get is how there can be so many different rates for PLPD? It covers nothing on your vehicle! I am paying $94 a month for a 07 Colbalt just to be legally on the road. A new car? lol.. not an option w/ these rates. No way I'd pay more for insurance then the dang car note.

[MizMotown]

Also can someone explain to me why one would pay $80 for PLPD on a 98 Ranger vs. $95 for a 07 Colbalt? Exactly HOW does the year of the car factor in PLPD rates? Both at the same address.

[jt1]

Good point. Please see shavers v attorney General 402 mich 559 for a fairly detailed but accessible discussion of the rate making process.

Thanks for the info. I'm curious how closely the law is being followed. In the ruling, it states, "Manualspertaining to classifications, rules and rates, rate plans and everymodification of any of the foregoing must be filed with the Commissioner ofInsurance. MCL 500.2406; MSA 24.12406."

I have been told my multiple people in the OFIS [[or whatever it is now called) that they do not request, or receive, anything from the insurance companies except the rates that will be charged. They also explicitly stated that they do not ask for nor receive any actuarial data. The insurance companies have stated that they will not supply this to anyone as it includes confidential information on how they formulate their rates.

So, I am still curious how the State of Michigan OFIS actually protects anyone or supplies any reasonable oversight.

[jt1]

And, if anyone needs a good laugh of the great oversight at the State level.
From the State of Michigan website: http://www.michigan.gov/difs/0,5269,...0--,00.html#11

What can I do about rate increases on my insurance coverage?

The Michigan Insurance Code allows each insurer to determine its own rate level for coverage based on loss and expense data, sound actuarial principles, and judgment. However, it does in some instances such as personal auto and home insurance impose restrictions on the criteria that can be used to determine rates for individuals. For example, if a criteria is not specifically identified in Section 500.2111then it cannot be used to develop base rates, discounts, or surcharges except that any criteria meeting the requirements of Section 500.2110a could be used to develop a discount plan. In addition, as long as there is competition in the market [[numerous insurers writing coverage) the Code makes it almost impossible for us to consider the rates of an insurer excessive based on the difference between it and other insurers' rates. Currently, there are hundreds of competing insurers for the various types of coverage offered in Michigan. Though insurers are allowed this freedom from rate regulation, it is important to note that anti-collusion laws do not allow non-affiliated insurers [[those who do not have the same owner) to discuss rate levels with one another to collectively determine the rate to be used in the market. In addition, consumers who are "eligible persons" pursuant to MCLA 500.2103 are provided access to personal auto and home insurance coverage from any insurer they choose via Sections 500.2117 and 2118. They cannot be denied these insurance coverages. Within this competitive rating scenario, rates from insurer to insurer may vary by tens to hundreds of dollars for essentially the same coverage. Yet, market pressures force insurers to keep their rates at the lowest possible level in order to retain existing business and obtain new business, otherwise consumers will obtain coverage from other insurers who charge a lower total premium. Shop [[compare quotes) with at least five to ten different insurers prior to purchasing new or renewal coverage. What a great consumer protection organization. They are really putting their best foot forward to hold the companies accountable to ensure that rates are set fairly. They require insurance carriers to offer coverage in all areas however they allow the companies to set their own rates with no oversight. Paraphrased: "You have to offer everyone coverage, but just make the prices outrageous where you don't want to do business and it will all work out for you"

The follow up explanation pretty much says, we get the information in a mess of random paper form and electronic form and you, the consumer, are too stupid to understand it.

[brizee]

And, if anyone needs a good laugh of the great oversight at the State level.
From the State of Michigan website: http://www.michigan.gov/difs/0,5269,...0--,00.html#11

	What can I do about rate increases on my insurance coverage?
	market pressures force insurers to keep their rates at the lowest possible level in order to retain existing business and obtain new business, otherwise consumers will obtain coverage from other insurers who charge a lower total premium. Shop [[compare quotes) with at least five to ten different insurers prior to purchasing new or renewal coverage.

The follow up explanation pretty much says, we get the information in a mess of random paper form and electronic form and you, the consumer, are too stupid to understand it.

They run your credit score when giving you a quote.

3 times[[?) and it incurs a fee.

What they are suggesting is literally not possible without messing with your credit.

What a goddamn joke.

[jt1]

Yep. Essentially, the state is saying, "If you dress like a whore it is your fault for getting raped"

Pretty great logic, unless you are the person getting raped.

[mwilbert]

Also can someone explain to me why one would pay $80 for PLPD on a 98 Ranger vs. $95 for a 07 Colbalt? Exactly HOW does the year of the car factor in PLPD rates? Both at the same address.

Insurers may use the make and model of a car as inputs to their calculations of how much a given policy will cost them, independent of the cost of repairing/replacing the car itself, because people with different driving habits are attracted to different kinds of cars.

Since Michigan insurers don't have to explain their rates, it's hard to say more than that.

[Dan Wesson]

Then you have the Michigan Catastrophic Claims Fund that cost you $186 per vehicle per year on top of what the insurer decides to quote you.

[prokopowicz]

Can someone itemize a $10000 premium for me? How much for personal liability, medical liability, theft/vandalism, deductibles, etc. the article did not do a good job of breaking this down.