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1) Re: 2009 Senate Bill 166 (Ban setting auto insurance rates by location )  by Admin003 on October 29, 2009 

 

Senator Scott’s third statement is as follows:

Once again, I have something to say—Since the people cannot come and speak for themselves I’ve had a website for a number of years, www.insuranceredlinging.com, and I want to read to you a few, just a few, of the e-mails that I’ve received since they can’t be here for themselves:

“I have a 1998 Dodge Neon and I no longer carry full coverage insurance. At the time I purchased my vehicle in 1998, I was 28 years of age. In 2003, my co-worker, 26 years of age with a wife of 25 years of age, purchased full coverage auto insurance through AAA Michigan. They both live in Troy, Michigan. One vehicle was a 2000 Intrepid and the other vehicle was a 1999 Aero van. My co-worker was quoted a price of $450 every six months. He had to make payments for four months and had two months free of payments. At that time (2003), I was 33 years of age with no moving violations in 13 years. I called the same agent about five minutes after my co-worker did and was quoted a policy that would cost me over $3,000 every six months. No doubt this was because I live in the City of Detroit. I received similar quotes from other insurance agencies as well.”

Another one: “I have lived in Detroit all my life and lived at the above address for over 13 years now. In 2004, my homeowners insurance went from $800 and some odd dollars to almost $2000. Because I’m a single parent with two children and don’t receive child support on a regular basis, I couldn’t afford to keep an insurance policy on my home. So for a little less than a year, I wasn’t covered and wouldn’t you know it, I had a fire at my home in September 2005. If there is something that can be done about the rising cost of home and auto insurance, I pray that relief comes soon.”

Another one: “I’m a single-income parent who has worked hard all my life and continue to do so. Recently, I decided to reward myself by refinancing my mortgage for some home repairs and a ‘new’ used 2002 PT Cruiser. I did all the research regarding theft, crash testing, and so forth—passed with flying colors. Now, being that I have lived in Detroit all my life, I knew the rate would increase, and it did, within my budget, so I purchased it. A week late, I was informed by my automotive insurance agent that they made a mistake—to quote them, ‘Oops!’—and informed me my rate would be $400. Of course, I thought a year, but no, it was a month. That was just outright crazy—I pay more for the insurance than I do for the car!”

Another one: “I’m paying $1,400 a year on a 1989 Buick—no fault only. No ticket, no claims. The car is only worth $2,500. I am unable to put my son on the policy because insurance will go up well over $3,700 a year!”

Another one: “I’m a former Hamtramck City Council member and left office to join the U.S. State Department. My car insurance on a $6,000 car in Hamtramck was $2,200 a year. This is for someone who has never received a speeding ticket in his life. When I moved to Guatemala, I was surprised to find that my insurance rate was under $1,000 a year. This is in a country with a high incidence of crime, car jackings, car theft and a large numbers of uninsured drivers that have no respect for any traffic laws. The question is, why is it that when I’m in Hamtramck, with no record, keeping my car in a locked garage, and my insurance rate is 2 1/2 times more than in a Third World country where crime is a major concern and drivers drive on the wrong side of the street at night with no headlights?”

Another one: “When I moved to Detroit in 1976, I had a hard time even getting insurance. When I told an agent I thought he might be redlining, he said, “I don’t care what you call it, I’m not selling you insurance.” Now, I’m a 57-year‑old with a perfect driving record (so has my husband and daughter), but we are paying exorbitant rates!” This is a doctor, Dr. Marilyn Daniels of Detroit.

Another one: “My own personal experience came about from me moving back into the city some nine years ago. I moved back into the city from Livonia. The move distance was approximately 10.4 miles on either side of 6 Mile Road. After I changed my address and renewed my car insurance policy, my insurance rate increased from $500 to $1,000 a year. I am the same person before the move that I was after the move, a driver with no tickets, moving violations or traffic accidents. The only difference was moving from the suburbs into the city. The move tells me in and of itself that something is wrong in the way insurance rates are determined.”

Another one: “I got a quote from them based on where I work (Bloomfield Hills) and where I live (Hamtramck). Not only was the quote for Hamtramck more than double that of the Bloomfield Hills quote, the yearly rate was nearly the same as the value of my car!”

Another one: “I pay in excess of $4,000 per year to insure two cars and my home. I am not a driver with points, nor am I under 25, nor have I had any accidents within the last 10 to 15 years, nor any claims on my homeowners insurance, yet I pay through the nose for insurance. This is strictly because I live in Detroit. I know this for certain because my car insurance rates jumped when I moved from the suburbs eight years ago into the city. This is one factor in my decision to get out of the city—I can’t afford these rates!”

Another one: “I am a 33-year-old college graduate. I have two bachelor’s degrees and two master’s degrees. I have been driving since I was 15. I have only had one accident in that period of time, which was determined that I was not at fault. I have seen my insurance rates rise an average of 29% over the last five years. I am at the age when my insurance rates should be falling, but not in Detroit—they are steadily rising. If something is not done, and I mean soon, I will be one of the ten thousands of citizens that will bid a fond farewell to Detroit and the state of Michigan.”

Another one: “I can’t afford full coverage auto insurance. When I went looking, I was told by one company I should use my sister’s address in Sterling Heights.”

Another one: “I have made no claims on my homeowners insurance since the ice storm of 1999, and yet my insurance has more than doubled. I have no tickets, points, accidents on my driving records and yet my insurance has more than doubled. I live in Detroit because I love this city. However, now that I am retired, I am finding it difficult to afford. Why can’t we be charged for insurance based on our personal performance rather than on an address?”

Another one: “I am a native Detroiter. I am a 38 year old and have made a conscious decision to buy a home and live in the city of Detroit. I am often discouraged at the national studies that prove we as Detroiters pay more in car insurance, and yet have to ‘show’ or ‘prove’ these facts are true.”

Another one: “I’m a single mother, it is difficult to maintain auto insurance on my vehicle at the rate of $2,600 to $3,100 every six months that I have been quoted in the past.”

Another one: “When I moved back to Detroit from Livonia in 2000, my insurance rates on my 1991 Mercury Cougar went from maybe $600 per year to $1,500 per year. In Livonia, my car was parked in the open under a carport. In Detroit, it is secured in a garage and my distance of travel to work was cut in half. The increase is not justified!”

Another one: “I’m a resident of Detroit with a perfect driving record, good credit, graduate degree and no claims (all factors, I’m told, in determining rates aside from zip codes). I have been paying nearly $300 a month for car insurance. My insurance is as much as my car payments.”

Another one: “I am tired of paying high auto and homeowners insurance just because I live in Detroit, Michigan. I should not be penalized because of where I live. Judge me on the fact that I have a perfect driving record or the fact that I have zero claims on my homeowners insurance.”

Another one: “My husband and I have spotless driving records, good credit, and multi-policy discounts paying $4,500 per year for a 1998 and 2005 Ford Explorer. This is absolutely out of hand and should be considered illegal.”

Another one: “If you live in Detroit, you are going to pay the highest rates for insurance. This means on your home, your car, your life and health. It’s just not fair. There should be no boundaries. I have a home and three cars, and it is the law that you carry insurance. It’s hard when everything is going up in price, but the wages.”

Another one: “I was a resident of Warren, Michigan, for over five years. While in Warren, I enjoyed lower auto premiums. However, in August 2004, I purchased a home in Detroit. Needless to say, my days of lower auto premiums have left. My insurance nearly doubled. My homeowners insurance has increased from $800 to $1,000. A co-worker recently bought a home in another city that is only two blocks from me. Her homeowners insurance is a mere $450.”

Another one: “It is awful that we live in the poorest city in the nation and pay the highest price for insurance in the nation. We have three cars in our household and we pay in excess of $3,500 every six months. This is unbelievable.”

Another one: “I’ve had to move out of my Detroit home because insurance rates are just too high.”

Another one: “Insurance rates should not be a function of your address or income bracket or race or religion or any other than one’s driving record.”

Well, colleagues, I have just read you a few of the many stacks that I have. Had I known this was coming up today, I would have brought all of them over so that you could see them.

Well, just recently on I-75 there was a big spill over because a car hit a big tanker. That is costing millions of dollars. It’s not in the city of Detroit, is it? But we’re all paying for it.

As I drive home every day, there’s sometimes pile-up after pile-up, and they’re not in Detroit. Let’s be real. Let’s be real and call it what it is. It’s discrimination. And you know what? I’m going to encourage people to start their own insurance companies or don’t pay for them, OK. If we mandate something, we must make it affordable.

And I’m going to say it again. We must treat everyone fairly.

I ask that all of you make a conscious decision so you’ll be able to sleep tonight.

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2) Re: 2009 Senate Bill 166 (Ban setting auto insurance rates by location )  by Admin003 on October 29, 2009 

 

Senator Whitmer’s statement is as follows:

I rise to add my comments to my colleagues who spoke before me. I think that they did a great job laying out some of the intricacies of this piece of legislation and the law that I think can be very complicated.

You know, there was a man by the name of Jay Angoff who came to testify not too long ago, who was talking a little bit about the Kreiner decision and how it’s impacting rates for the people of the state of Michigan. I think it’s important to know that insurance companies have had record profits. And the reason that they’ve had record profits is, well, some of them have practiced very unsavory processes where they deny, delay, confuse, and refuse valid claims; taken advantage of consumers of the state of Michigan. Not everyone is a bad actor, I know, but there are many instances where valid claims and valid consumers have been taken advantage of in the state of Michigan, and no one is protecting them.

We have a system where everyone in our state is required to have auto insurance. It’s compulsory. And if you don’t buy insurance from a for-profit insurance company, you can go to jail for up to a year. We will throw you in jail for up to a year if you don’t buy a product from a for-profit company. There’s only one place in the whole law that that applies and that’s in auto insurance.

Now I heard my colleague talk about Lansing rates and Escanaba rates and Grand Rapids rates. I appreciate your pointing out what may happen to constituents in the 48823 zip code. But if you changed two of those numbers and you’re in the 48223 zip code of Detroit, that could happen to any one of us. I would submit that, if it happens to any one of us, it can change on a dime. So we are all at risk, and we should all be concerned at the unfairness of the policy.

These big insurance companies are picking on the little guy and no one is standing up for them. And my colleague has been asking for a hearing—a hearing.

There’s a fair and reasonable constitutional standard that’s never been enforced. It’s a constitutional standard that the Supreme Court said in the Shavers decision. For 30 years, we’ve had tools that the Attorney General’s office, especially in the last eight years, has not challenged or enforced on behalf of our people. And here we make a mockery of this; right here today. This gamesmanship has got to stop.

We wonder why the people are so worried and upset and scared in the state of Michigan, and they are angry with Lansing. Look in the mirror. Two out of the last three years, we haven’t delivered a budget on time. You keep asking everyone else to make a sacrifice, and you haven’t made one yet. This has got to stop, and we’ve got to lead by example.

I’m going to support this bill. It’s time for someone to start doing the right thing in this town and sticking up for the little guy.

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3) Re: 2009 Senate Bill 166 (Ban setting auto insurance rates by location )  by Admin003 on October 29, 2009 

 

Senator Clarke’s second statement, in which Senator Whitmer concurred, is as follows:

I want to again commend the Senator from Highland Park for making a valiant effort to make insurance rate regulation fairer in this state. I ask you to support this bill that would remove the rating of home and auto insurance by territory.

I want to deal with specifics right now with the insurance code. Insurance is allowed to be grouped by territories, specifically under MCL 500.2111. It is a good framework for spelling out the types of rating factors insurance companies can use in rating home and automobile insurance. The rating by territory, however, has much less significance now than it did in the past, and here is why. Because we don’t have jobs anymore or they are not concentrated in central cities, people live in those cities have to drive all around the region across the state to actually work for a living. As a matter of fact, if you and I who drive in southeastern Michigan identify where the big traffic jams are, they’re not in Detroit anymore. They’re out in Novi—I-696. They’re jammed bumper to bumper out there. Actually, if you rated by traffic density, those areas should have the highest rates now, not the city of Detroit; not urban areas.

But, you see, that’s not the case. The reason why I support removing territorial rating is that it’s one step in making insurance rate regulation fairer. But the reason why insurance rates aren’t fair is not just because people are rated based on where they park their car at night. It’s because of that farmer who couldn’t afford to go to college because he had to drop out of school to raise his family and works hard every day. That farmer, who lives in a rural area, who doesn’t have a college degree, who doesn’t have a white-collar professional job, is charged a higher rate than a Ph.D., white-collar CEO. For a person in a suburban area who has fallen behind on their utility payments, that gets reported on their credit history. They can get charged a higher rate on their auto insurance even though they have zero points. For someone who’s lost their full-time job and is receiving unemployment compensation and is struggling to pay their bills, under our current system, an insurance company can charge them more money because they’re making less money. How ridiculous is that?

So, you see, what makes insurance regulation so unfair is that insurance companies are able to charge people based on where they live, on their job, on their education, on their credit history, and on the size of the family which they have consisting of driving age family members; or the fact that they may have been pulled over by the cops, had all of the insurance paid up, but may not have had the proof of insurance to give the police officer at that time. That person could get charged a higher rate. Do you think that’s fair? That’s not fair at all.

If a consumer tries to go to the insurance commissioner and say, “Please, you know, I should get a refund because I’m a good driver. I have zero points. Don’t penalize me because I’m in foreclosure. I can barely make it as it is.” Well, unfortunately, under our current rate regulation, all an insurer has to prove is that there’s a bunch of other insurance companies riding high on unfair insurance. So that rate is not excessive. How ridiculous is that? Especially since we’ve exempted the insurance companies from the state antitrust laws. That means that they can collude and share information on how they price insurance so that they can all legally be high. That’s what the Senator from Highland Park is trying to get at. This is a first step in that—the first step.

You know, members of this caucus talk about high taxes and people in Michigan can’t afford high taxes. You know what’s the most unfair tax? It’s the one we impose on everybody by law. We require everyone to have auto insurance, and if you don’t, you can go to jail for up to one year. We compel people to buy insurance, but then we don’t protect them from unfair insurance practices. That’s what she’s trying to do right now. This is a first step.

That’s what Senator Thomas’ amendment was about, rolling back everyone’s rates, but we’ve got to do that in the context of having a fairer rate system. We need to give the commissioner the power to approve all of these rates. We have to allow the commissioner to be able to refund these higher unfair rates even though there may be a whole bunch of other insurance companies charging people a lot of money. That should make it fairer because other insurers are doing that.

People in the state of Michigan—drivers, homeowners, business people, and doctors who pay high medical malpractice insurance premiums—can no longer afford to pay this. Let’s roll back all property casualty insurance rates. Let’s re-regulate the property casualty insurance industry so that it is fair. This is about reducing taxes, but it’s a tax that we pay to a private company.

One last point I want to make about the rate rollback. Here’s why that is fair. If you compare insurance companies to utilities, utilities have their rates regulated. But, you know, when a utility company spends money on a plant, on a base load power plant, the value of that asset depreciates over time. They lose money. But you know what insurance companies invest their money in? They invest it in long-term bonds and investments. By their very nature, they appreciate. They can afford a 20 percent rate rollback and make a lot of money.

One other final point I want to say is insurance companies will say, Well, you know, we only provide discounts to people if they have a Ph.D. or if they have a good credit score or if they have this certain job. We don’t penalize people. We only discount people. “Well, this is how a good law was screwed up by MCL 500.2110a. That allows discounts, but it actually allows surcharges because here is this on the record. For every discounted insurance a company provides, there is a corresponding surcharge for someone else. You see, there’s no free lunch. These discounts under that section don’t lower the overall cost of insurance. They just shift it to the people who can’t afford it.

The bottom line is this: We have an insurance rate regulation system which allows insurance companies to charge people in the state with the highest unemployment rate which has been hurt more by globalization, it allows insurance companies to charge higher rates to people because they earn less money. That’s not right. Let’s vote for this bill. This is the first step in the right direction.

Mr. President, I would like my remarks printed in the journal. I am so proud today. I didn’t expect to ever have the opportunity to talk about how we can reduce the most unfair tax of all—property casualty insurance rates. Thank you, though, for giving us this opportunity to talk about this important issue.

I just want the public to know if they really want more disposable income in their pockets right now, it’s not the government we need to go after; go after the insurance companies because you know what? You are paying too much money, and you are a good driver. You are paying too much money, and you maintain your home. You’re paying too much money, and you’re struggling to stay in business. You deserve lower rates. Let’s lower them. This is the first step in that direction.

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