Insurance companies keep their undefeated streak alive in MI Supreme Court

The rightwing Michigan Supreme Court struck a blow for justice for the downtrodden insurance companies and their record profits against the powerful poor and middle class consumers on Thursday when it ruled on a split 4-3 vote that insurers can continue to consider customers' credit scores when setting rates for auto and homeowners insurance.

In Insurance Institute of Michigan vs. Insurance Commissioner, the Republican majority on the court held that then-Office of Financial and Insurance Services Commissioner Linda Watters exceeded her authority under the insurance code to ban credit scoring through rules she issued in 2004. The “Gang of Four” helped insurance companies keep their undefeated streak alive, and insurance companies have not lost a case in the Michigan Supreme Court in 12 years.

There is no better reason to unseat Justice “Sleepy” Bob Young this November so people can get justice. It’s amazing that Young didn’t recluse himself from the case. He was the head attorney for AAA insurance for many years.

“This is a discriminatory decision by Bob Young and his Republican cronies on the Michigan Supreme Court,” said Mark Brewer, Chair of the Michigan Democratic Party. “This decision will increase premiums for drivers and drive up the cost of auto insurance coverage. Once again, Young and Republicans on the Court side with their campaign donors - the insurance companies - over Michigan consumers.”

I have no idea how your credit score, as well as your education level, zip code and even job title, determines what kind of driver you will be. Your rate should be based on your driving record and the value of your car.

The Republican’s had to twist themselves into a pretzel to please their moneyed donors to justify this discriminatory decision.

According to subscription only Gogwer, Justice Maura Corrigan, writing for the majority that included Stephen Markman, Elizabeth Weaver and Young, said “offering a discount for a good credit score is no different than one for safety devices in a vehicle.”

"Discounts for anti-lock brakes are offered because they reduce the risk of loss, and discounts for high insurance scores are offered because they reduce the risk of loss," she wrote. "The more insureds there are with anti-lock brakes, the lower the risk of overall loss. Likewise, the more insureds there are with high insurance scores, the lower the risk of overall loss."

Say what? A high credit score is the same as anti-lock breaks? That will be good to know when someone with a high credit score is speeding through a residential area and slams on the breaks to avoid hitting a kid who ran into the street.

Once again, the Republican majority on the court stiffed the consumers in favor of their insurance company masters.

Petition drive to put the Fair Affordable Insurance Act on the November 2010 ballot is underway

The petition drive to put the Fair Affordable Insurance Act on the November 2010 ballot is officially underway, spearheaded by Sen. Hansen Clarke, D-Detroit.

Fair Affordable Insurance Rates (FAIR) has to collect 304,000 signatures in the next 180 days to place it on the November ballot, and they plan to collect 400,000 by the end of April.

The ballot question came about because the Michigan Senate refused to pass real auto insurance reform and in October rejected a 12-year effort in to do away with redlining.

Consumers in Michigan pay the 12th highest auto insurances rates in the nation, but the problem in Detroit is even more acute. Drivers in Detroit pay an average of more than $5,000 a year, yet the national average annual car insurance rate is only $949.

“We’re trying to lower expenses for people to free up money so they can spend it on their mortgage, credit card debt or their children,” Clarke said.

The law, if approved by voters, would cut auto, home and business insurance premiums by 20 percent, cut premiums by 20 percent for safe drivers, reimburse consumers when insures overcharge them, mandate insurers follow consumer protection laws, prohibit insurers from unfairly canceling coverage and protect consumers from predatory insurance practices. More importantly, it will base insurance premiums on your driving record, not on education level, credit score, zip code or even job title.

“We believe this is a good policy,” Clarke said. “This is the largest tax break you can give a business.”

The petition is two pages that fold out because of the complex legal language, but Clarke said it is airtight and the law has worked elsewhere.

“It has lowered premiums in California,” he said. “We have learned from past court cases, and the language is better.”

A June 2007 study concluded that Michigan auto insurance companies have been gouging consumer while hoarding record-breaking profits for years.

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, an independent and highly respected auditor 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. The report concludes that all three Michigan auto no-fault insurance companies are making excessive profits.

“This (proposal) is not anti-insurance,” Clarke said. “We want them to make a profit, but we want them to give back some of their windfall profit.”

State law says the petition language is good for 180 days, and there can be no more than 90 days between the first and last signature.

The fight for fair auto insurance rates is taken up by the people

All too often, Michigan residents have to go around the obstructionist Michigan Senate to get good legislation passed, and that is the case with legislation dealing the high cost of insurance redlining.

The Michigan Board of Canvassers approved ballot language on Monday for a petition brought forward by the group Fair Affordable Insurance Rates (FAIR) that will require insurance companies to base the rate they charge you for insurance on the type of car you own and your driving record, not where you live, your credit history, education level and the type of job you have.

Consumers in Michigan pay the 12th highest auto insurances rates in the nation, but the problem in Detroit is even more acute. Drivers in Detroit pay an average of more than $5,000 a year, yet the national average annual car insurance rate is only $949.

Predictably, insurance industry representatives oppose the initiative, and they are making the usual false and hysterical claim that it will put them out of business.

Sen. Martha G. Scott, D-Highland Park, has been championing this issue for almost seven years, and in a cynical attempt to kill the bill last month, the Senate discharged it from committee without a single hearing and no notice. This Senate’s steadfast inability to act appears to have promoted the petition drive.

The also played the old standby game of pitting Detroit against the rest of the state and the suburbs, making the false claim that if Detroit drivers have to pay less, then the rest of the state will have to pay more.

The petition would require 304,000 signatures before it can go before the Legislature, which would then have 40 days to take action if approved. If they do not or disapprove of the petition, it would be added to the Nov. 2, 2010 ballot.

According to the Detroit News, Kim Bowman, the Chief of Staff for Sen. Hansen Clarke, D-Detroit, who is backing the proposal, said she did not know when the petition drive will start. State law says the language is good for 180 days, and there can be no more than 90 days between the first and last signature.

Let’s do this for Sen. Martha Scott.

Sen. Scott vows not to give up the fight for fairness

For almost seven years, Sen. Martha G. Scott, D-Highland Park, has fought against the practice known as insurance “redlining.” 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.

Every session day, Sen. Scott has gotten up and given a speech, urging the majority party to move her bills. It went without saying that the plea included a committee hearing with testimony from the people hurt by redlining and an honest debate.

That didn’t happen, and the bill was discharged from committee Wednesday with no hearing or advance notice just to be defeated. The following is Sen. Scott’s statement following the devastating vote.

You may have heard already that in a surprise vote, the Senate on Wednesday defeated my bill to ban territorial rate setting for auto and home insurance.

The Republican defeat of my bill to prohibit the use of territories when setting auto and homeowner insurance rates is a slap in the face to all the hard-working citizens of Michigan who pay unfair, exorbitant insurance rates.

For years now I have been asking for action and hearings on my bills to reform auto and homeowner insurance rates in Michigan. Today the Senate Republicans decided to discharge my bill to ban rate setting by territories to the Senate floor only to then vote against this bill that would have made insurance rates fair for citizens across Michigan. This kind of game-playing has no place in the debate on this very important ‘pocketbook’ issue for Michigan citizens.

Senate Republicans discharged Senate Bill 166 after I rose to give my daily statement on insurance issues in which I referenced an October 14 Grand Rapids Press editorial that spoke out against the insurance industry’s use of credit scores to determine a person’s auto insurance rates. SB 166 would ban the practice of using where a person lives to determine how much their insurance would cost. Senate Republicans defeated an amendment that would have given everyone an immediate 20 percent cut in their rates, a provision that addressed Republican concerns that lower rates for citizens living in metro/urban areas would drive up rates for citizens living in other areas of the state.

If we are going to require that every driver carry auto insurance then we need to make sure that the rates they are charged are fair, and right now these rates are anything but fair. Insurance rates should be based on the car a person drives, that person’s driving record, and the distance that person regularly drives. If we adopted these common sense changes to our auto insurance laws then we would no longer pay the 12th highest rates in the country, and our citizens living in our metro/urban areas would no longer pay the highest rates in the country.

The insurance industry argues that one reason for setting rates by territory is because of the high rate of accidents or auto thefts in some areas of the state. However, the Michigan Auto Theft Prevention Authority reported in February that auto thefts in Detroit fell 14.2 percent from 2006 to 2007. Statewide, vehicle thefts have plummeted 42 percent since 1986. Yet insurance rates have not gone down.

Senate Republicans did a great injustice this week to all the hard-working Michigan families who are trying to survive in a very tough economy. My bill deserved thoughtful consideration: a committee hearing so that people could come in and testify followed by debate on the Senate floor. Instead the Republican voted my bill to the Senate floor so that they could defeat it and deny Michigan citizens fair and affordable auto insurance rates. My bill may have gone down to defeat but I will continue calling for auto insurance reform and fair rates for everyone.

Fight redlining with a rally on Wednesday

If you’re tired of paying some of the highest auto insurance rates in the nation even you have never had an accident or even a traffic violation, then the place to be is at noon on Wednesday on the Capitol lawn to fight the practice of redlining and the high cost of auto insurance and demand insurance reforms that will allow all residents to purchase fair and affordable auto and home insurance.

The rally is sponsored by Sen. Martha G. Scott, D-Highland Park. Michigan consumers pay the 12th highest insurance rates in the nation. Detroit consumers pay an average of more than $5,000 a year for auto insurance, the highest rates in the nation.

Scott has sponsored legislation a person’s driving record. Rates should not be set on zip code, education level, job title or credit score – all factors currently used to determine insurance rates.

The same rally was also held in 2007, and more than 2,000 people showed up. Speakers set for noon on Wednesday include Rep. Robert Jones, D-Kalamazoo, former Rep. Nelson Sanders and Butch Hollowell, the state’s insurance advocate.

Detroit residents pay the highest rates in the nation, and Scott has arranged buses for some Detroit residents, The buses leave at 9 a.m. from various points in the city. Contact Scott’s office at (517) 373-7748 for pick-up locations.

Michigan Residents Deserve Fair and Affordable Insurance

The national average annual car insurance is $949. Take a stab at what the average is in Detroit.

$1,500? $2,000? $3,000?

Try more than $5,000. These are the highest rates in the nation, in one of its poorest cities.

In fact, in the next most expensive city to insure a car – Philadelphia – the average is $3,700, 25 percent less than in Detroit.

A recent independent report showed that where a driver lives has the greatest effect on a driver’s rates. It also found that Detroit’s premiums ranged from 241 to 365 percent higher than premiums in Kalamazoo.

Well, you might be thinking, that’s too bad for Detroiters. Hope things get better for them.

But it’s not just a Detroit problem. Across our state, consumers pay the 12th highest auto insurances rates in the nation.

And how much they pay is determined by factors that seem to have little or nothing to do with their driving record or the value of their car. Insurance companies can set rates based on education level, credit score, zip code and even job title.

I’ve been asking for insurance reform here in Michigan for many years now. What I want is simple: I want fair and affordable insurance for every citizen of our state, with rates determined by a person’s driving record and the value of their car.

That’s not so outrageous, is it? But year after year, I introduce bills that languish and then die in committee without getting a hearing.

No one is willing to come to the table and talk about this issue and what we can do to make things better for Michigan citizens.

On Wednesday, September 30, citizens from every corner of the state are invited to join me and other legislators on the steps of our Capitol to let their elected officials know that this issue matters to them.
Money spent on insurance – something required by law in Michigan – is money not spent on a mortgage, utilities, children, and families.

Changing the way insurance companies do business in Michigan will put money back into the pockets of hard-working people.

Senate Bill 166, which would outlaw setting insurance rates based on zip code, and other insurance reform measures deserve a hearing, and then to be put to a vote.

Please join me for this important event. It’s time for legislators to let Michigan citizens know where they stand – with them, or with business as usual.

###

All Michigan citizens are invited to the rally. For information on bus rides from the Detroit area, call Senator Scott’s Detroit office at (313) 372-8567 during business hours after Labor Day. Citizens are also encouraged to carpool to the event or to organize a bus.

Senator Martha G. Scott represents the 2nd Senate District, which includes areas of Detroit and the cities of Hamtramck, Harper Woods, Highland Park and all of the Grosse Pointes. She serves on the Senate Appropriations Committee. Visit her online at www.senate.mi.gov/scott/.

Scott to announce plans for rally for fair auto insurance rates

Sen. Martha G. Scott, D-Highlander Park, will formally announce plans for her Sept. 30 rally where citizens from across the state will gather on the Capitol lawn to fight the practice of redlining and the high cost of auto insurance and demand insurance reforms that will allow all residents to purchase fair and affordable auto and home insurance at a pair of press conferences next week.

The first press conference is set for 8 a.m. Tuesday, Sept. 8 in front of the Cadillac Building, 3022 W Grand Blvd, Detroit. The second will be at 9 am. Wednesday in Room 405 of the Capitol in Lansing.

“Money spent on insurance – required by law in Michigan – is money struggling families cannot spend on their mortgage, their utilities, and food,” Scott said. “Michigan consumers pay the 12th highest insurance rates in the nation. Detroit consumers pay an average of more than $5,000 a year for auto insurance, the highest rates in the nation. Does that sound fair and affordable to you?”

Scott and other legislators seeking change to Michigan’s insurance laws believe that rates should be set on the value of a person’s home or car, and, for auto insurance, a person’s driving record. Rates should not be set on zip code, education level, job title or credit score – all factors currently used to determine insurance rates.

“I’ve been asking for insurance reform here in Michigan for many years now,” Scott said. “What I want is simple: I want fair and affordable insurance for every citizen of our state, with rates determined by a person’s driving record and the value of their car. That’s not so outrageous, is it? But year after year, I introduce bills that languish and then die in committee without getting a hearing.”

Like the huge crowds that turned out two years ago to plead for reform that fell on the deaf ears of Senate leadership, citizens will again ask for hearings on insurance reform bills now before the Senate, and for votes on those bills. Scott is the sponsor of Senate Bill 166, which would outlaw the practice of setting insurance rates on zip code.

All Michigan citizens are invited to the rally. For information on bus rides from the Detroit area, call Senator Scott’s Detroit office at (313) 372-8567 during business hours after Labor Day. Citizens are also encouraged to carpool to the event or to organize a bus.

Senate Republicans thumb their noses at Michigan consumers

LANSING -- Michigan Senate Republicans continue to stand up for the powerful and thumb their noses at Michigan consumers, but Sen. Buzz Thomas, D-Detroit, called them out on the Senate floor on Wednesday.

The House passed a package of 12-bills last week on Aug. 19 that holds insurance companies accountable who wrongfully deny customer claims. The package of bills were referred to the Senate Committee on Economic Development and Regulatory Reform today, and the chair of the Committee, Sen. Alan Sanborn, R-Richmond, is an extreme right-winger, and he has said publicly he has no intention of even holding a hearing on the bills.

That did not sit well with the Senate Minority Floor Leader.

“I object to those referrals and hope that the Senate would change that referral,” Thomas said. “I do so because the chair of the committee has already indicated, even before those bills were sent over to the Senate, that they would receive absolutely zero consideration or debate. In fact, one news report quoted the chair as saying, ‘Do you want these bills labeled do not resuscitate or dead on arrival when they come to the Senate.’"

The House Insurance Committee took some very emotional testimony as people talked about paying their premiums for years, but the insurance company simply refusing to pay at all or delaying it for years so they can settle for a much lower cost.

“Michigan citizens who routinely and regularly pay their insurance premiums expect, when they file a claim, to be offered an opportunity at some form of benefit, “ Thomas said. “The issue of insurance companies wrongfully denying consumers who have legitimate claims in their time of need deserves a thorough, open discussion in the Michigan Senate.”

The chair of the House insurance Committee, Rep. Barb Byrum, D-Onondaga, was targeted with robo calls, and she and Democratic members of the committee were subjected to attack radio ads by a group called the “Coalition to Insure Michigan's Future.” Sanborn even showed up at the House committee hearings to assure the insurance industry that they had nothing to fear as they continue to reap record profits.

“If the chair of the committee is so confident in his position that he is willing to attend a House hearing and declare this effort over before it's even begun, he should have the courage to hold the hearings and take a vote,“ Thomas said. “If he truly believes his own rhetoric and reasoning, debate your position and let us move on to a vote.”

Senate Republicans have routinely given insurance companies every protection possible at the expense of consumers. In fact, 46 other states have enacted similar protections proposed for consumers that have been bankrupted by profiteering insurance companies who put profits above people.

“If the majority expects anyone to take them seriously when they claim to care about the economic struggles of Michigan families, they will refer these bills to a committee willing to consider them, since again, regretfully, the chair of the committee now with jurisdiction is apparently unwilling to hear from those who have been wronged,” Thomas said.

Michigan insurance companies have also been allowed to legally discriminate against Detroit drivers and other urban drivers for years in the form of Redlining. Detroit consumers pay an average of more than $5,000 a year for auto insurance, the highest rate in the nation. Michigan consumers pay among the highest insurance rates in the nation.

But Senate Republicans refuse to allow the redlining bills to move. Sen. Martha G. Scott, D-Highlander Park, is the sponsor of the anti-redlining bills, and a rally is planned for September 30 on the Capitol lawn to fight the practice of redlining and the high cost of auto insurance.

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.

Expect GOP false attacks on Homeowner Stability Initiative

With the announcement of President Barack Obama’s plan to help millions of homeowners in danger of losing their homes with the $75 billion Homeowner Stability Initiative, we can expect the same kind of debunked Republican lies we saw used against the economic stimulus package.

Despite the lies being debunked numerous times, even Michigan Republicans like U.S. Reps Candice Miller and Mike Rogers continue to use the lies of the high speed rail line between LA and Las Vegas, money for STD prevention, money for ACORN and money for a mouse habitat in San Francisco. We will see some of the same tired, false talking points with the Homeowner Stability Initiative.

My favorite oldie but goodie is that the housing foreclosure crisis is the fault of former President Jimmy Carter. That follows the time-tested GOP strategy of if you're going to tell a lie, it might as well be a big one. That lie goes, that it was the fault of the "Community Reinvestment Act back in 1978 where lending institutions were required to start lending to people that couldn't afford to pay the loans back."

The fact is it simply addressed the practice of "redlining." Redlining is the practice of an insurance company or bank refusing to insure an auto or home based or lend money based solely on the geographic area where the person lives, provides an inferior product based on geography or at a higher price. The Community Reinvestment Act simply required banks to lend money to people previously for that reason, but the people had to be eligible for a loan in all respects.

It was greed, the lack of regulation and the sub-prime mortgages that led to the foreclosure crisis. Anyone doubting that just had to watch the recent CNBC documentary "House of Cards."

The documentary was more chilling and scarier than any horror or slasher movie, and it highlighted the collective folly that brought down Wall Street and cost millions of Americans their homes, jobs and retirement savings.

It showed how former used car and waterbed salesman were now selling mortgages instead of trainer mortgage specialists, and the goal was to get loans to as many people as possible to make money. Veteran mortgage bankers said gone were the days when a borrower had to have two year's worth of tax returns and they went to your jobs to interview you to prove income, and now you just had to "state" your income with no proof on the application.

I know a guy in Livingston County who got a mortgage to buy the lakefront home from his three siblings after their father passed away, and he didn't even have a job. Needless to say, the home their father built with his own hands was foreclosed within a year, despite refinancing at least twice.

Just remember that when the GOP misinformation, talking points and lies begin.

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)

Insurance companies threaten to flee after being forced to finally pay their fair share

The one industry that paid little tax under the old Single Business Tax (SBT) is threatening to leave the state now that the new Michigan Business Tax (MBT) is finally making them pay their fair share.

William F. Woodbury, assistant vice president and associate general counsel of Lansing-based Auto-Owners Insurance Co., had a column in the Lansing State Journal last week complaining that “this tax increase makes it more expensive to do business in Michigan and it will have a direct impact on consumers, who ultimately will pay the price for the decisions made in Lansing.” Meaning: we are going to raise your premiums so we can still rake in record profits.

According to a story in the Detroit News last month, a recent study by Missouri's insurance commissioner from 1993-98 concludes that Michigan’s auto insurance companies have been piling up huge record profits and excessive surplus funds.

AAA of Michigan was used as a focal point in the study, because most of its business is done within the state. AAA's profit more than doubled to $104.2 million last year from $50.9 million in 2002. AAA's surplus -- money set aside to pay for future claims payments -- swelled by 68 percent during that period, increasing to $1.53 billion from $915 million.

Apparently doubling its profits is not enough, and Woodbury plays his trump card: threatening to go where the tax is lower and move out of Michigan.

Make no mistake; other states are lining up to handpick Michigan's most profitable companies. Their aim is clear: They want the jobs and tax revenues that go with growing companies. Many states, like our neighbor Indiana, are looking at lowering taxes on insurance companies to lure them across the border. The MBT makes it easier for them to do that.

I say good luck with that. According to the Lansing Chamber of Commerce, insurance companies have not been paying their fair tax share for years.

Insurance companies in Michigan have long enjoyed preferential tax treatment – Michigan’s tax on insurers is the fourth lowest in the country. This legislation will create a 2 percent premiums tax that will make our tax system similar to other states and bring insurance taxation in line with the national average.

Not only that, but Michigan insurance companies have been allowed to legally discriminate against Detroit drivers and other urban drivers for years in the form of Redlining. Redlining is the practice where an insurance company refuses to insure an auto or home based solely on the geographic area where the person lives or provides an inferior product based on geography or at a higher price. Sen. Martha Scott, D-Highland Park, has been fighting the practice of charging Detroit drivers as much as 365 percent more than people in other Michigan urban areas.

It’s hard to feel sorry for insurance companies. I have been paying auto insurance premiums for some 30 years and have never had a claim. That adds up to a lot of cash in their pocket. Michigan’s no-fault insurance law even gives them an unfair advantage, in my opinion. In what business do you have a law that requires you buy their product, and we have law enforcement ensuring you do buy it? If you don’t buy it you face a heavy fine. I think there should be a law that says you have to subscribe to a newspaper to insure you know what’s going on in the world, or you should buy a gym or swimming pool membership to insure you are healthy.

It’s time other businesses and companies in Michigan stopped subsidizing insurance companies, and they are now required to pay their fair share.

Senator wages daily battle against discriminatory practice of ‘Redlining’

Can you imagine how outraged you would be if you had to pay 365 percent more for something as essential as, say water, than your neighbor just because you lived where you live. If you can imagine it then you can begin to feel some of the same frustration as Sen. Martha Scott, D-Highland Park.

For the past three years Scott has fought against the practice known as insurance “redlining.” 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. Scott said studies have shown drivers in Detroit pay a much as 17 percent more in insurance rates than people in similar-sized cities, and insurance premiums for Detroit drivers have increased four times the rate of inflation. A recent report in the Detroit News reported on a study that showed a typical driver would be charged $1,624 in Kalamazoo, but the same driver would be charged $5,933 for the same insurance if they lived in Detroit, a 365 percent difference.

“But you folks don’t need a study to tell you how outrageous these premiums have become,” Scott said.

There is one thing you can count on occurring every single day in the Michigan Senate, and that is Scott getting up and speaking on the Senate floor about the long-standing problem of redlining. Scott said some three years ago a House bill was introduced to call for reimbursement of the fine for drivers ticketed for not having proper proof-of-insurance if they could provide a copy within a reasonable amount of time. When it got to the Senate Scot introduced an amendment to the bill that would require auto insurance rates be based solely on distance drove, the type of vehicle and driving record. It was soundly defeated in the Republican-controlled Senate.

“That day, I will tell you, was my worst day in the Legislature,” Scott said. “I will tell you I stood on the Senate floor that day and I made a promise that I would speak every session day on fair insurance rates.”

Redlining is a discriminatory practice that has been around for more than 50 years when certain people buying a home were directed to certain geographic areas based on the color of their skin. That’s illegal, but the powerful insurance industry is apparently allowed to do so legally.

It seems a little unfair that under Michigan’s no-fault insurance law that a state law makes everyone buy their product under heavy monetary penalty if they don’t. In my former profession, I wondered why we didn’t have a state law that required every homeowner to subscribe to a daily newspaper of their choice. That seems fair.

Redlining has ensured Detroit drivers and homeowner pay some of the highest premiums in the country, and it’s not just happening in Detroit. It’s also unfair when the rates are so high for people who may be the least able to pay them. The Supreme Court ruled in 1978 that insurance is an essential product, and that the state has a duty to ensure people have equitable and affordable access to insurance coverage. The state has failed in that duty.

There are more than a million uninsured drivers in the state who cannot afford the premiums, and half the drivers in Detroit are uninsured.

It is that failure by the state that has ensured insurance companies are making excessive profits. A study released last month, according to the Detroit News, concludes that Michigan auto insurance companies have been piling up big profits and excessive surplus funds. 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 last year from $50.9 million in 2002.

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.

There is much more information on redlining available on the web site Scott has set up, and you can also sign an online petition against redlining. Scott has vowed to speak every session day until fair and equably priced insurance premiums are available to everyone.

UPDATE: It occurred to me I should have posted some of the floor speeches Sen. Scott made on the Senate floor, courtesy of Senate Democratic Caucus Communications. The speeches are excellent and entertaining, and she does a wonderful job of making her case for the legislation.