Is the insurance industry's blatant redlining finally being reigned in?

[brizee]

http://www.detnews.com/article/20110...t-constitution

The pertinent bit is towards the very end of the article.

http://www.freep.com/apps/pbcs.dll/a...=2011106060353

It sounds like two seperate programs.

I hope these aren't sabotaged.

There's already bitching in the comments about Detroit getting "special treatment" though.

[Wingnatic]

Special treatment ? As in getting porked in the ass for years because of a zip code where they live kinda special treatment , not to mention credit scores will raise your rates if its low wherever you live . What ever happened to if I can pay the premium , nothing else matters . The industry will use bullshit stats on stolen cars etc . to raise rates , they'll find something to raise the rates . It took forever to outlaw this practice , but no time at all for some judge [[probably paid off ) to repeal the ruling and this wasn't that long ago . Then we have a bulging catastrophic fund , the amount per vehicle we pay went up on that , and the people who set that amount we pay for that every year don't even work for the State of Michigan , they are a group of insurance execs that sit in a dark room and figure out how to screw us more . Now legislation may be pending to repeal the State helmet law . I'm not even sure when you get insurance , the charge for the catastrophic fund applies to them , yet they have the most claims . Insurance industry in Michigan is legal robbery .
Legislators To Review Michigan Helmet Laws
Opponents Cite Concerns Over Helmet Safety
Freedom or safety -- two words that could make or break the motorcycle helmet law in Michigan.
Currently, the law says riders must wear an approved U.S Department of Transportation helmet when riding on public roads.
But two bills have been introduced in the state legislature to repeal the state's helmet law.
One bill would let riders 21 and older to ride without helmets if they carry at least $20,000 in personal liability insurance.
The other bill would let riders 20 and older bike helmet-free if they have passed a safety course or carried a motorcycle endorsement on their driver’s license the previous two years.
Opponents of the legislation who think helmets should be mandatory say that's the best way to boost safety, especially as biking becomes more popular thanks to higher gasoline prices.

Motorcycle crashes account for a disproportionate share of money paid out of the Michigan Catastrophic Claims Association [[MCCA), a fund which is supported by a surcharge on every auto insurance policy in the state. While motorcyclists represent two percent of the assessment paid into the MCCA, they account for five percent of the money paid out.

[1KielsonDrive]

It'll never happen. Just as other big corporations have their way with you, insurance companies will do as they please, keeping in mind that there will be occasional ebbs and flows for theatrical and marketing purposes. Much like oil companies and their gas prices, insurance companies have to pull back once in a while and act like they're concerned and/or constrained by the ?free market? to keep the public in line and believing that companies and congress, their enablers, have the nation's best interests in mind. I've worked in the insurance industry on and off for years. I have a bit of an idea what they're up to.

[Hypestyles]

If this can have impact, so be it.. but I also want the charter proposal to pass that gives the city leeway to create a public option.. probably won't be perfect, but I hope much better than the other commercial options.. anybody know if this concept exists in other cities at all?

[JBMcB]

Well, something needs to be done. One of the main reasons insurance is so high in the city is because of the high number of uninsured drivers. If you have insurance and are hit by an uninsured driver, your insurance company has to eat the cost, instead of passing it along to the other driver. They *could* go after the other driver for the costs, but if they can't afford car insurance to begin with, it probably isn't worth it.

[1KielsonDrive]

Well, something needs to be done. One of the main reasons insurance is so high in the city is because of the high number of uninsured drivers. If you have insurance and are hit by an uninsured driver, your insurance company has to eat the cost, instead of passing it along to the other driver. They *could* go after the other driver for the costs, but if they can't afford car insurance to begin with, it probably isn't worth it.

You are probably correct in your assessment. Regardless, the insurance industry makes record profits even after bailouts from you and I, the very people they overcharge while making those profits. I'm not knocking profits, I'm knocking RECORD profits. From us. After bailing them out. That's like giving the crackhead who just broke into your house and stuck you up at gunpoint a few hundred extra to help assist their getaway.

[bartock]

This is not being done in the interest of consumers. I think that they have carefully calculated the impact that lower rates [[and coverage) would have on the number of folks who will get insurance against the costs they are paying for underinsured and noninsured injuries now. The ultimate goal, I believe, is to begin eliminating what is the best coverage in the county if you are seriously injured in a car accident.

[Det_ard]

I'm always amused that none of the folks that complain year after year about record oil company and insurance company profits never seem to do the smart thing and buy their stock.

[fryar]

^ That is amusing.

Other changes in the charter include:
[[...)
— Empowering the city's law department to determine ways to address residents' auto and property insurance needs with a city-run system.

...with a city-run system? I don't mean to rail against this idea - especially in light of the perception, if that should be all it is, that there is actual redlining going on - but, without injecting partisanship, I am also amused at...or maybe bemused by...the novel concept of single-payer car insurance. How mirthful.

National research has found that Michigan has among the highest rates of uninsured drivers in the country -- 19% in 2008-09

That's not just the city, folks, even if we're talking every single city resident. Once again, we have a pathetic statewide problem. I don't mean to say that Northeasterners aren't curt or what-have-you - right now we've got a promising politician doing what he can to get Jon Stewart to crack jokes about his smallish johnson - or that Michigan is particularly sucky, but this is a thing about Michigan in general, whether or not it's a more acute issue in Detroit.

[JBMcB]

Regardless, the insurance industry makes record profits even after bailouts from you and I, the very people they overcharge while making those profits. I'm not knocking profits, I'm knocking RECORD profits. From us. After bailing them out.

Which insurance companies got bailed out? AIG was the largest I could find. There were a couple of life insurance companies [[Hartford, LIncoln) that paid back the bailout loans, but that's it.

The car insurance market is pretty cut-throat right now, with Allstate, Progressive, Geico, Nationwide, and Farmer's all vying for market share. If there is money to be made selling cheap insurance to Detroit drivers, wouldn't somebody be doing it?

[fryar]

[[...)I've worked in the insurance industry on and off for years. I have a bit of an idea what they're up to.

I'll admit that I find this puzzling, though. Isn't there a plethora of insurance agencies, one of which could stand to profit big-time from lowering Detroit car insurance rates to non-redlining levels? I have not worked for insurance companies, so I don't know precisely what the statistics are that they use to calculate the risk per area code or zip code or whatever it is, but it just seems like it would be so obvious a route to market dominance. How does this red-lining in insurance work?

IIRC, wasn't the original red-lining, with housing, based on the promulgation by Fannie Mae, the guarantor of mortgages, of the concept that certain, ahem, demographics increased risk, and so mortgages secured with properties in areas in which these <cough> demographics predominated would not be guaranteed, effectively eliminating access to capital in these areas because there was no guarantee in place? And so something comparable to this is happening here, now?

I'm sure this debate has been had on here many times before [[in fact, I know so). But it is hard to imagine that this is really going on. What does the process look like?

That thread I linked to does contain some quotes for no-fault insurance on old beaters that are far higher than what I paid, a multiple. And yet I was hardly the patron saint of credit bureau flawlessness at the time. I'll admit I find it puzzling that someone would pay hundreds monthly for no fault, almost hard to believe. I do recall that insurance carriers were none too forthcoming when I tried to discern how significant the premium "penalty" would be for living in Detroit, because they weren't allowed to disclose that.

But, I mean, out with it, if anybody knows anything. If this is really happening, let's talk about it. Once in a while, this forum accomplishes something.

Anybody who works for an insurance carrier want to potentially violate their employment terms in favor of social progress and shlep their netbook to a library, download a new browser, register with a new userid, and shed some light on what the deal is or might be?

[1KielsonDrive]

I'm always amused that none of the folks that complain year after year about record oil company and insurance company profits never seem to do the smart thing and buy their stock.

Typical assumption of a white bread rich ass who assumes that everyone has money to invest. In case you're not too sure of it, there are people out here trying to find money for a meal, mortgage, room and medical care.

[1KielsonDrive]

And of course, the stock market is a sure guarantee of riches. Especially at the level of hundreds or maybe thousands of dollars invested. Sure guarantees you a steady income.

[1KielsonDrive]

Stock returns will pay your insurance premiums. For sure. Uh huh. Ask posters here how much their returns pay of their premiums.

[ferntruth]

You are probably correct in your assessment. Regardless, the insurance industry makes record profits even after bailouts from you and I, the very people they overcharge while making those profits. I'm not knocking profits, I'm knocking RECORD profits. From us. After bailing them out. That's like giving the crackhead who just broke into your house and stuck you up at gunpoint a few hundred extra to help assist their getaway.

Aside from AIG, what other insurer received a bailout?

[ferntruth]

The title of this thread is very misleading. Redlining no longer exists, as it is illegal to redline. The term redline means to flat our refuse to sell insurance in a given area. To my knowledge, there are no companies that refuse to sell in Detroit. If they are licensed to sell in Michigan, they must sell to Detroit residents.

They may charge rates that are high, and that may drive customers away, but they will sell the policy if you are willing to pay the premium.

As others have said, the unusually high number of uninsured drivers in Detroit, coupled with the car theft rates and the high number of hit and runs in the city all contribute to high rates.

[iheartthed]

The title of this thread is very misleading. Redlining no longer exists, as it is illegal to redline. The term redline means to flat our refuse to sell insurance in a given area. To my knowledge, there are no companies that refuse to sell in Detroit. If they are licensed to sell in Michigan, they must sell to Detroit residents.

They may charge rates that are high, and that may drive customers away, but they will sell the policy if you are willing to pay the premium.

As others have said, the unusually high number of uninsured drivers in Detroit, coupled with the car theft rates and the high number of hit and runs in the city all contribute to high rates.

Redlining refers to charging higher rates as well. And yes, it still exists. And yes, Detroit is being redlined.

[Det_ard]

Typical assumption of a white bread rich ass who assumes that everyone has money to invest. In case you're not too sure of it, there are people out here trying to find money for a meal, mortgage, room and medical care.

Nice. Typical shallow-thinker response. You like to pop off with the angry rhetoric but you don't get it. You are cannon fodder for the most simplistic populism. Big=bad. Everything is fixed against us. I can't get ahead because the big, bad corporations won't let me. We're all victims. Waa, waa, waa.

Geez, my babies cried less than you.

And of course you have to assume that someone with a different opinion than you is a "white bread rich ass". Assume that only your rock-stupid-populist mindset has validity. How's that workin'?

[Det_ard]

Redlining refers to charging higher rates as well. And yes, it still exists. And yes, Detroit is being redlined.

No.

Detroiters pay more. Insuring Detroiters costs more.

Insuring Corvettes costs more than insuring Civics. Insuring smokers costs more than insuring non-smokers. Charging more for car insurance in Detroit is actuarially sound.

Explain the obvious paradox:

Insurance companies are greedy blood-sucking parasites who'll do anything for profits.
Insurance companies charge Detroiters more than actuarially indicated.
Yet no insurance companies are competing and marginally lowering prices to capture these huge excess Detroit insurance profits.
And no non-profit community or government group has stepped in to "help" relieve the insurance companies of their excess millions of profits despite several decades of baseless "gouging" and "redlining" accusations.

Oh, sure, it's all a huge conspiracy. Go with that. It's MENSA-worthy.

[fryar]

As a neutral arbiter, perhaps Wikipedia can shed some light:

Redlining is the practice of denying, or increasing the cost of services such as banking, insurance, access to jobs, access to health care, or even supermarkets to residents in certain, often racially determined, areas.

We have a geographically contiguous area the residents of which experience increased cost of insurance. As for the technicality of whether this is redlining, that does seem to about nail it, it would seem to me. It's not emblematic, since there is no discrimination on the basis of race.

If I am lumped in with many of Michigan's moronic 19% for reasons lacking in nuance to the point of profanity [[I lived in downtown and walked to work, just how risky could I have been) because we shared a post office, that's basically redlining.

[iheartthed]

No.

Detroiters pay more. Insuring Detroiters costs more.

Insuring Corvettes costs more than insuring Civics. Insuring smokers costs more than insuring non-smokers. Charging more for car insurance in Detroit is actuarially sound.

Explain the obvious paradox:

Insurance companies are greedy blood-sucking parasites who'll do anything for profits.
Insurance companies charge Detroiters more than actuarially indicated.
Yet no insurance companies are competing and marginally lowering prices to capture these huge excess Detroit insurance profits.
And no non-profit community or government group has stepped in to "help" relieve the insurance companies of their excess millions of profits despite several decades of baseless "gouging" and "redlining" accusations.

Oh, sure, it's all a huge conspiracy. Go with that. It's MENSA-worthy.

How about we continue this discussion after you learn the definition of redlining?

[Det_ard]

As a neutral arbiter, perhaps Wikipedia can shed some light:


We have a geographically contiguous area the residents of which experience increased cost of insurance. As for the technicality of whether this is redlining, that does seem to about nail it, it would seem to me. It's not emblematic, since there is no discrimination on the basis of race.

If I am lumped in with many of Michigan's moronic 19% for reasons lacking in nuance to the point of profanity [[I lived in downtown and walked to work, just how risky could I have been) because we shared a post office, that's basically redlining.

No, that actuarial reality based on claims. For someone like you that rarely drives it would be nice if there were a policy that was based on verifiable mileage driven. Actually, I've heard something about that recently but I don't know if it exists around here.

If I don't drive much, no matter where I live, I'm paying a relatively high price per mile too. ?Hardly an example of redlining.

[Det_ard]

How about we continue this discussion after you learn the definition of redlining?

How about you take ECON 101?

[trstar]

How about we continue this discussion after you learn the definition of redlining?

He can't hear you. The facts are clogging his ears.

It is criminal that a DUI have individual who lives in the 'burbs AND works in the city, pays half as much as a city resident with a clean record who works in the 'burbs.

I checked and its true. Thats why many residents have vehicles with addresses outside the city.

[JBMcB]

In case you're not too sure of it, there are people out here trying to find money for a meal, mortgage, room and medical care.

So if companies can make money by selling cheap insurance in Detroit, why don't they? Crap, insurance companies are spending billions of dollars in advertising trying to drum up business. If they could sell dirt cheap insurance to a few hundred thousand Detroiters, that would be worth it, wouldn't it? Or are you implying that every insurance company out there hates black people more than they love making money?