Sep 27, 2007

Insurance rally brings out large crowd to urge fairness in insurance rates

More than 2,000 people gathered on the steps and in front of the state Capitol Wednesday to rally for fair and affordable insurance, wearing t-shirts that said, “enough is enough,” carrying signs and chanting “move those bill.”

The event was organized by Sen. Martha Scott, D-Highland Park, who has been fighting the practice of “redlining” since she was elected to the Senate some five years ago. Redlining means an insurance company refuses to insure an auto or home based solely on the geographic area where the person lives, provides an inferior product based on geography or at a higher price. Drivers and homeowners in Detroit and other urban areas can pay as much as 365 percent more for insurance coverage based on their location. Scott has stood up at the end of every single Senate session to urge the Republican majority in the Senate to take up her bills addressing the problem.

“I’m so excited you are here,” she told the large and enthusiastic crowd. “I have waited for this day for a long, long time.”

Scott was joined by her fellow Detroit area legislators and legislators from urban areas to urge an end to the practice of basing the rate people pay for auto insurance - that is required by law to be carried - to be based on location, zip code and credit report instead of the person’s actual driving record. One speaker said a driver in Detroit pays more for auto insurance than a driver in the suburbs with a drunk driving convention on their record.

“While I represent Flint and I am proud of Flint, I know you can all use the extra money you are paying for inflated insurance rates to put back in your pocket,” said Rep. Brenda Clack, D-Flint. “I experienced redlining when I first bought a home in Flint, and I was directed to a part of town I didn’t particularly care for.”

Scott was also joined by number of religious, community and political leaders from Detroit, as well as two busloads of United Auto Workers (UAW) from all over the state.

“I’m so proud of Detroit and the Detroit City Council,” said Detroit City Council Member and Motown icon Martha Reeves. “I’m here to tell you I have experienced the same problems we are fighting, and we are tired of being charged.”

In January Scott introduced Senate Bill 37 that will create an affordable and accessible insurance task force within the Office of Financial and Insurance Services, and she also introduced SB 38 that prohibits insurance rates from being based on where the person lives. Both bill were referred to the Committee on Economic Development and Regulatory Reform where they have yet to be taken up by the committee.

“We will not be silent and will not consent,” Scott said. “We’re as mad as hell and we’re not going to take it.”

Scott plans on introducing a package of bills next month that will help the state live up to the 1978 Michigan Supreme Court ruling that guarantees insurance is available to everyone at a fair and equitable price.

The bills, according to a Senate Democratic press release, would “allow the Insurance Commissioner to rule that rates are excessive; prohibit the use of credit scoring and other socio-economic based factors in setting premiums; allow the Insurance Commissioner to order refunds; and allow policyholders to ask the Attorney General to intervene if rates are found excessive. In addition, it would require the Michigan Catastrophic Claims Association be subject to the Open Meetings Act, with the Insurance Commissioner a voting member. It would also prohibit surcharges for gaps in coverage.”

Scott is also working with Detroit entrepreneur Ulrich Baker on a bill that will use Individual Development Accounts (IDA) to possibly self-insure. IDA’s are similar to 401Ks in that they are designed to assist low-income families save for the purchase of a major asset, like a home or a college education, with matched savings.

“We live in a country where we have a free market where we have competition,” Baker said. “If insurance companies don’t to it right we will do it ourselves.”

(Photo courtesy of Senate Democrats)

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