Insurance industry doesn't like Mike Duggan's city back auto insurance proposal.

[brizee]

The republican rag is already attacking it.

I didn't even think this was going to be one of his high priorities when i voted for him.

But if the industry is already squawking about it they must be scared.

He hasn't even laid out an outline or even proposed it yet.

Anyone that says with a straight face that the cost of car insurance in Detroit can't be significantly lowered has shown themselves to be unworthy of being listened to.

Alas it won't fly with Republicans. Or "Democrats" with Republican hands up their ass like Orr so I don't know why the paper is even flailing about so soon.

[Wesley Mouch]

The republican rag is already attacking it.

I didn't even think this was going to be one of his high priorities when i voted for him.

But if the industry is already squawking about it they must be scared.

He hasn't even laid out an outline or even proposed it yet.

Anyone that says with a straight face that the cost of car insurance in Detroit can't be significantly lowered has shown themselves to be unworthy of being listened to.

Alas it won't fly with Republicans. Or "Democrats" with Republican hands up their ass like Orr so I don't know why the paper is even flailing about so soon.

Don't underestimate Duggan.

Whenever you see something in the media, you should always remember that there's a reason. Today, that reason probably isn't its news value. The papers will run anything they get handed to them. Much cheaper than hiring staff to write.

My guess is that Duggan wants to use this as an example of how he's really fighting for Detroiters, and that his camp pushed the story. Right now, Orr has all the power. Duggan wants to share. Duggan needs something to put pressure on Orr and become the media darling. He has to prove to Orr that he matters. That he can't be ignored. This could be it.

[[And anyone who's ever paid Detroit insurance rates will kiss the ground Duggan walks on if he can make substantial progress with this plan -- or if the mere existence of the plan gets the evil insurance companies to rethink their redlining of Detroit's auto insurance market.)

Underestimate Duggan at your own risk.

[rcd1948]

This is very good for the D, I also hope he will address home owners insurance as well as reduce taxes in the city.

[Scottathew]

Normally I would be fiercly against this, but the private industry currently doesn't provide a good solution for folks.

The ultimate solution is to attack crime, but that's going to take time.

[MikeyinBrooklyn]

48307, I agree completely. Insurance rates [[of all kinds) are super high in Detroit not because insurers are jerks but because claim rates are very high. But I would gladly listen to Mr. Duggan's proposals once they are detailed. I have 2 reasons to be skeptical, though:
1) If claims exceed revenue, would taxpayers be on the hook?
2) Insurance is one of the most legally and financially complex industries there is. Many thousands of pages of law and regulation. Can a government unable to collect it's parking ticket revenue or keep lightbulbs in the lights manage a large insurance operation?
I am not opposed to giving it a try, but taxpayers need to be protected and the city would need to demonstrate a plan to manage the program. I agree that if we got auto theft under control it would substantially reduce rates.

[bailey]

Wayne County accounts for 67 percent of all auto thefts in the state, with the majority of those occurring within the city limits. The cost of medical care is higher in the city. And there are also more auto break-ins. And an estimated half of drivers in Detroit do not carry insurance, another factor driving up costs.

From The Detroit News: http://www.detroitnews.com/article/2...#ixzz2kXugKO1t


There is no profit in auto insurance, Kuhnmuench says. Michigan auto insurance companies ranked dead last in the nation in return on assets between 2001 and 2011. The average policy sold at a loss. Auto insurers typically make their money selling property and other insurance to their motorist clients

From The Detroit News: http://www.detroitnews.com/article/2...#ixzz2kXv0Ufai

Is there something false about those statements?

[DetroitPlanner]

I can tell you from working with Duggan in the past he is a pit-bull. He will latch onto something and drag it down in order to do what he think is right.

[Gannon]

I can tell you from working with Duggan in the past he is a pit-bull. He will latch onto something and drag it down in order to do what he think is right.

Thanks for the personal feedback.

I've been gradually turning around on the guy after the election. Opened up to him the instant I saw his honest joy at winning, and nearly everything else he's said has been positive. Plus, that puff piece on his wife in the Freep got me feeling much more positively about him.

If he can make some progress on this...and I think creating a citywide citizen's Credit Union is the first step, since I'd guess pooling assets is key to underwriting a group...he will go down in history as a mayor akin to Pingree.

If this becomes a TRUE competitor to the insurance industry chokehold on the city, rolling back their monopoly on auto and homeowner's policies [[and more, who knows, insurance is a big game of stacking cards)...not just some pretty-faced scam underwritten by the same bozos who've stolen from the citizens all these years, I might just become a dyed-in-the-wool Duggan supporter.

Already I'm not vehemently opposed to him, and that is quite a step for me. We'll see, as more of his transition team and appointees are announced. I'm still grappling with Liza Howze beaming in the background...is she the new Sharon McFail?!

[coracle]

Based on what we read in these Threads about dealing with Detroit City departments I would not relish the possibility of being involved in an accident with someone insured by the Detroit taxpayer and probably ending up on the unsecured debtors list because I'm from out of town. I'm sure the real insurers will realize the same.

[Meddle]

And an estimated half of drivers in Detroit do not carry insurance, another factor driving up costs.

Is there something false about those statements?

Chicken and Egg, Wag The Dog, Catch-22 or however else you want to look at it, but people don't carry insurance because they can't afford it. The insurance companies drive their own costs up by making policies unaffordable and by paying too much for parts and services on claims. It's a racket.

Why should a 5 MPH bump in a parking lot incur a $1,000 or more claim?

Answer ... it shouldn't.

[softailrider]

So now we're supposed to believe that the insurance industry isn't making any money on their auto policy's. As someone who has been involved in the insurance industry for 34 years let me clue everybody in; don't believe a word of that bullshit, they're making a ton of money in this state. The Republican Michigan Supreme Court is bought and in the pocket of the big insurance company's. Every ruling goes the insurance company's way.

[Danny]

The Republican backed Insurance Industry is going to have to give into Duggan's demands of his proposal city insurance program. Liberal Detroiters are sick and tired of paying RED-LINING rates and get little or no coverage. This scam to rip-off poor Detroiters will be abolished.

[Hermod]

Why should a 5 MPH bump in a parking lot incur a $1,000 or more claim? Answer ... it shouldn't.

Get a scrape on your door fixed on your own nickel some time. You would be surprised at what body and fender shops charge. Cars today are built to crumple and be difficult/expensive to fix.

[Wesley Mouch]

Get a scrape on your door fixed on your own nickel some time. You would be surprised at what body and fender shops charge. Cars today are built to crumple and be difficult/expensive to fix.

A little hyperbolic. They aren't intentionally 'built to crumple'.

We demand higher fuel economy.

We demand glitzy and fancy over durable, usable, and repairable.

The result is difficult/expensive to fix.

[Packman41]

A little hyperbolic. They aren't intentionally 'built to crumple'.

Incorrect. Rather than a “little hyperbole” it is absolutely true. Cars are intentionally designed to absorb an impact with crumple or crash zones.

http://jalopnik.com/395700/why-do-ca...-crumple-zones

“Engineers design crash zones to fail along a predictable path using varying materials and construction techniques. As a result, predictable bending, breaking, and stretching occurs. These failure events act like a giant shock absorber sitting in front of your dash, "soaking up" force.”

[Wesley Mouch]

Incorrect. Rather than a “little hyperbole” it is absolutely true. Cars are intentionally designed to absorb an impact with crumple or crash zones.

http://jalopnik.com/395700/why-do-ca...-crumple-zones

“Engineers design crash zones to fail along a predictable path using varying materials and construction techniques. As a result, predictable bending, breaking, and stretching occurs. These failure events act like a giant shock absorber sitting in front of your dash, "soaking up" force.”

Why yes, of course you're right here that engineers know and rely on 'crumpling' to absorb energy. What I don't believe is that car companies intentionally design their cars to need expensive cosmetic repairs caused by minor dings -- although I'm sure they don't mind cars looking old sooner than necessary.

[MikeyinBrooklyn]

The Republican backed Insurance Industry is going to have to give into Duggan's demands of his proposal city insurance program. Liberal Detroiters are sick and tired of paying RED-LINING rates and get little or no coverage. This scam to rip-off poor Detroiters will be abolished.

Danny, before reading further please remember that I am not opposed to the city giving this a shot as long as taxpayers do not have to back the venture. That having been said there are several things wrong with your post.

First, about Republicans being backed by insurance companies: Insurance companies give millions of dollars to both parties and candidates on both sides. And many companies favor the Affordable Care Act, because [[in theory) it forces people to buy their product.

Second, your "red-lining" comment is absurd. Detroit generates tons of costs [[claims) for insurance companies. That is why rates are higher in Detroit. While another competitor [[hypothetical city-run plan) could slightly lower costs with increased competition, costs for insuring cars [[or property) in Detroit will be higher as long as there is a high rate of theft [[or arson, or burglary). The crime rates in Detroit are the result of cultural and political decisions in the city, and out of the hands of insurers.

Third, creating a "city run insurance program" will have to be approved by state regulators [[all insurance policies are), and may require an act of the legislature to expand the city's powers to create it. That means an angry city leadership can't just wave a wand and do away with the meanies. Mayor Duggan will need significant time to craft a model of how it will work, convince legislators and the governor that it is a good idea, and regulators that the city has the chops to pull it off. Republicans will need to be on board.

Fourth, if a program created artificially cheap insurance, such as by lowering the threshold of what a city-run policy needed to provide, or subsidizing city-run premiums or claim payments, normal insurance companies would almost certainly stop selling policies here. That would drive up premiums in the city further.

To some up: high rates in Detroit are not a conspiracy; Detroit has the ability to make policy choices to reduce rates; Republicans need to be involved in a solution; and any action will have consequences, possibly negative.

[Hermod]

A little hyperbolic. They aren't intentionally 'built to crumple'.

We demand higher fuel economy.

We demand glitzy and fancy over durable, usable, and repairable.

The result is difficult/expensive to fix.

They are built to crumple in any collision to absorb the shock and pass as little of it to the passengers as possible. It crumples for safety.

[Wesley Mouch]

Danny, before reading further please remember that I am not opposed to the city giving this a shot as long as taxpayers do not have to back the venture. That having been said there are several things wrong with your post.

First, about Republicans being backed by insurance companies: Insurance companies give millions of dollars to both parties and candidates on both sides. And many companies favor the Affordable Care Act, because [[in theory) it forces people to buy their product.

Second, your "red-lining" comment is absurd. Detroit generates tons of costs [[claims) for insurance companies. That is why rates are higher in Detroit. While another competitor [[hypothetical city-run plan) could slightly lower costs with increased competition, costs for insuring cars [[or property) in Detroit will be higher as long as there is a high rate of theft [[or arson, or burglary). The crime rates in Detroit are the result of cultural and political decisions in the city, and out of the hands of insurers.

Third, creating a "city run insurance program" will have to be approved by state regulators [[all insurance policies are), and may require an act of the legislature to expand the city's powers to create it. That means an angry city leadership can't just wave a wand and do away with the meanies. Mayor Duggan will need significant time to craft a model of how it will work, convince legislators and the governor that it is a good idea, and regulators that the city has the chops to pull it off. Republicans will need to be on board.

Fourth, if a program created artificially cheap insurance, such as by lowering the threshold of what a city-run policy needed to provide, or subsidizing city-run premiums or claim payments, normal insurance companies would almost certainly stop selling policies here. That would drive up premiums in the city further.

To some up: high rates in Detroit are not a conspiracy; Detroit has the ability to make policy choices to reduce rates; Republicans need to be involved in a solution; and any action will have consequences, possibly negative.

Some good points. But only if you assume the current paradigm. Right now -- insurance rates are set by driver's address of residence. This does have some correlation to driving habits, but its not the best measure. A Birmingham resident who stays with her boyfriend in Detroit and works at a shop on Chene Street is probably more risk than a resident of Riverfront apartments who works in Lansing. Solely using Detroit residence makes no sense. And of course because Detroit's rates are so high, the market distortion of false residence addresses is a much bigger issue that your concern of insurance companies abandoning the Detroit market. Frankly, if they leave it won't matter much. Everyone with sense lies about their residency.

The real impact here is the realistic threat Duggan brings to the table. He says Detroit's charter allows this. He says he did this at DMC. With that real history, he may get some attention when he goes to Lansing to address this problem.

This isn't just a little problem. This is a massive issue. And we need an entirely new way of thinking about auto insurance for urban residents. I don't know what the solution is. And you raise valid points. But most of your arguments are the rough equivalent of saying that we can't fix Detroit at all because of a, b, c,....w, x, y, and z. Real leaders see real problems and fight to solutions. Obama didn't get the healthcare single payer system he wanted -- but he got American a comprehensive health insurance. Sure, it stinks -- but not as much as what we had. This will be the same. What we have stinks. And what we'll get will probably stink. Let's just hope it starts moving in the right direction.

Duggan's threats to the insurance industry status quo in Detroit will have results. It may not be a municipal insurance department. But I'll bet you'll see some innovation now.

These insurance companies are just monolithic beasts that use the same old formulas to crank out rates by residence address vs. actual claims. That's gonna change.

[trstar]

Some good points. But only if you assume the current paradigm. Right now -- insurance rates are set by driver's address of residence. This does have some correlation to driving habits, but its not the best measure. A Birmingham resident who stays with her boyfriend in Detroit and works at a shop on Chene Street is probably more risk than a resident of Riverfront apartments who works in Lansing. Solely using Detroit residence makes no sense. And of course because Detroit's rates are so high, the market distortion of false residence addresses is a much bigger issue that your concern of insurance companies abandoning the Detroit market. Frankly, if they leave it won't matter much. Everyone with sense lies about their residency.

The real impact here is the realistic threat Duggan brings to the table. He says Detroit's charter allows this. He says he did this at DMC. With that real history, he may get some attention when he goes to Lansing to address this problem.

This isn't just a little problem. This is a massive issue. And we need an entirely new way of thinking about auto insurance for urban residents. I don't know what the solution is. And you raise valid points. But most of your arguments are the rough equivalent of saying that we can't fix Detroit at all because of a, b, c,....w, x, y, and z. Real leaders see real problems and fight to solutions. Obama didn't get the healthcare single payer system he wanted -- but he got American a comprehensive health insurance. Sure, it stinks -- but not as much as what we had. This will be the same. What we have stinks. And what we'll get will probably stink. Let's just hope it starts moving in the right direction.

Duggan's threats to the insurance industry status quo in Detroit will have results. It may not be a municipal insurance department. But I'll bet you'll see some innovation now.

These insurance companies are just monolithic beasts that use the same old formulas to crank out rates by residence address vs. actual claims. That's gonna change.

yes, yes, and hell yes.

Auto Insurance has been a major injustice for years.

[MikeyinBrooklyn]

Wesley I am not going to enter into a debate about the expensive and lawless madness that goes by the name Obamacare right now, but it is not in any possible way something that would be good to emulate here.

But, like I said, I am not opposed to Duggan trying out new things. I think people should realize, though, that there are many factors beyond residential address that go into insurance cost. These include, but are not limited to:

1) Driving record [[how long you have been driving, how many accidents, parking & speeding tickets)

2) Model & year of car

3) How many driving age people in residence

4) What features the car has [[alarm, GPS locator, braking system, etc)

5) Parking status at home [[garage or secured lot is advantageous over driveway or street parking)

Detroiters often pay a lot because they drive older models with fewer safety & security features, park in less secure locations, etc.

The ultimate source of our high rates is not the insurers, who more or less make a fixed percentage, but our high cost city. If everyone switched to a well-run city plan, those barriers to low cost would still be there.

And I do think many things, including high insurance rates, are fixable. But you have to identify the correct problem. Address discrimination is a symptom. Aside from the "personal responsibility" items listed above, we have Detroit-specific problems that need to be addressed in order to lower the level of claims [[and rates) in Detroit:

1) Get unlicensed drivers and unregistered/ uninsured cars off the streets. Impound the cars, jail the drivers. The sizable number of people who drive unlawfully drive up the cost, significantly, for everybody else. Perhaps the city could do a "buyback" program for people who need to get rid of their junkers that can't be legally driven.

2) Strongly encourage people to park their cars more safely. Better street lighting helps, as do more police patrols in neighborhoods with high theft rates. The city could also offer GPS locating devices to those that don't have them. Knowing you would be very quickly caught when stealing a car should be a real disincentive.

3) All property owned by someone caught stealing or knowingly distributing stolen cars or parts should be seized by the city or state.

4) Offer classes at neighborhood schools or libraries in proper car maintenance & ownership. Some people have Dad show them how to change a tire, check the oil, etc. A lot of people in our city haven't had that and don't know how to responsibly own a car. You could also teach people about insurance, and how to lower your own rates.

5) Crack down on fraudulent use of addresses outside the city. If you are registered outside the city but actually live in the city, you are also certainly committing tax fraud and voter registration fraud, if you earn income or register to vote. If you actually do vote registered at the wrong address, you have a nice 1-5 year stay at a state-run hotel in Jackson awaiting you.

A city run insurance competitor is not going to fix the cause of high rates. Adding some competition can help a little, but we won't have decent rates until these other things are addressed.

[trstar]

Wesley I am not going to enter into a debate about the expensive and lawless madness that goes by the name Obamacare right now, but it is not in any possible way something that would be good to emulate here.

But, like I said, I am not opposed to Duggan trying out new things. I think people should realize, though, that there are many factors beyond residential address that go into insurance cost. These include, but are not limited to:

1) Driving record [[how long you have been driving, how many accidents, parking & speeding tickets)

2) Model & year of car

3) How many driving age people in residence

4) What features the car has [[alarm, GPS locator, braking system, etc)

5) Parking status at home [[garage or secured lot is advantageous over driveway or street parking)

.

The rest is deleted.



This is all anyone asks.

[MikeyinBrooklyn]

The rest is deleted.



This is all anyone asks.

Any insurance plan that took ONLY those things into account would either have the highest possible premiums or would be out of business. The other points in my post are also substantively important. Are they fair? No. But it's car thieves that are being unfair, not the insurance companies.

[sumas]

Most folk in the city can only do plpd. Over the past twenty years I have had at least 30K in damages, hit and run crap. Cost to insurance....Nada.

I will say that the last incident the drunk driver actually had insurance. Geiko was the insurer and paid promptly. No particular thanks to our police, the asshole was caught. Our parked car was hit, a call made, ho hum, who cares was the response. Then he hit several other cars before his car fell apart. Then police came.

Insurance needs to be affordable. Period. Go Duggan!

[cjd]

This is not to say what Duggan is pushing is unwarranted or unnecessary but what role does anyone think technology in, say 5-10 years, could play in all of this? I know that there are proposals for insurance to be based on miles driven as measured by your car [[black box or otherwise). Would it be possible/fair to base the rate also on where your car is parked each night of the month? Where you drove [[passed through bad neighborhoods @ 1am)? It would seem that some of the concerns expressed above about what questions are asked at the application time can be eliminated once they simply know everything about where, when, and how you drive. The suburbanites that park in Detroit all day might be charged a more commensurate rate as the Detroit resident that works in Troy.