Rally to fight the practice of redlining and the high cost of auto insurance set

LANSING – Planning for a September 30 rally on the Capitol lawn to fight the practice of redlining and the high cost of auto insurance is in full swing, and Sen. Martha G. Scott, D-Highlander Park, is urging everyone upset with the high cost of auto insurance to come to the rally.

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 and other factors or at a higher price. Detroit consumers pay an average of more than $5,000 a year for auto insurance, the highest rate in the nation. But this is not just a Detroit problem. Michigan consumers pay among the highest insurance rates in the nation.

The ridiculous cost has meant that people simply cannot afford auto insurance and forgo it, but they still have to drive to work to keep a roof over their heads and food on the table. If they are caught by the police, they face a stiff fine, as well as hefty Driver Responsibility Fees. For people living paycheck to paycheck, this can be financially devastating. The high cost of insurance could be going to food, their mortgage and utilities.

“If we mandate something, we should make if affordable,” Scott said.

Scott has introduced bills for the past five years requiring auto insurance rates be based on the person’s driving record and the type and value of the car they drive. That’s just common sense, but insurance companies are basing rates on zip code, credit history, education level and even job title. Scott sponsored a rally in 2007, and more than 2,000 people from all over the state showed up from as far away as Kalamazoo to voice their displeasure over this practice.

They told horror stories of people driving similar cars with similar driving records but different zip codes paying dramatically different rates. There were even examples of similar people paying different rates because one was a salaried employee and one was an hourly employee.

For the past five years Scott has fought against this practice, but her bills have not even received a single committee hearing. Obviously, the insurance lobby is extremely powerful. She attached an amendment to a bill five years ago that was defeated, and she vowed then that she would get up during every single Senate session day and speak about this shady practice.
“This has been my passion for a long time,” she said. “People in southeast Michigan pay the highest rates in nation, and correcting that has been my mission.”

The House Insurance Committee has been taking testimony on a 12-biil package dealing with penalties for wrongfully denying customer claims. The testimony has been very emotional as people talk about paying their premiums for years, but the insurance company refusing to pay at all or delaying it for years so they can settle for a much lower cost. But the package of bills does not deal with the high cost of auto insurance or redlining.

Insurance companies make the claim that the high rates are justified because of accidents and car theft, but accidents and car theft have declined for the past 15 years. But, predictably, the rates we pay continue to climb.

A study released in 2007 concluded that Michigan auto insurance companies have been piling up big profits and excessive surplus funds, reaching record levels in 2006. The report was authored by Jay Angoff, who served as Missouri's insurance commissioner from 1993-98. He said AAA's – the largest provider in Michigan - profit more than doubled to $104.2 million in 2006 from $50.9 million in 2002.

Get to the rally anyway you can; car pool, charter a bus or use your church bus. You an also write or call Senate Majority Leader Mike Bishop, as well as your own state Representative and Senator, and ask him to give the bills a hearing.