Detroit’s Mayor Proposes City-Owned Auto Insurance Company
DETROIT (WWJ) – City-owned car insurance? Detroit Mayor Mike Duggan started a buzz Wednesday night during the State of the City address when he said he would start a Detroit auto insurance company to prevent the red-lining that has caused auto insurance rates to soar.
“Our car insurance went from $3000 to $6000,” says Duggan.
That’s the sticker shock for the now-mayor upon moving south of 8 Mile… something Detroiters knew all too well. State lawmaker Rashida Tlaib says with even seniors in her district with no points and no tickets being slapped with ever-increasing auto insurance rates, the mayor’s plan is long overdue.
“I’m more eager to see what the details will look like, what the coverage will look like because right now in Lansing they’re offering, ‘okay, we’ll reduce it by, you know, a few hundred dollars, but we’re going to cover you less.’ So you’re not going to get as much coverage. And to me I don’t think we need to settle, we need to understand why it’s so high,” says Tlaib.
She says the city charter provides that option, but would it work? Tlaib says it might.
“If the city of Detroit is offering auto insurance then it’s not going to be a for-profit, most of the insurance companies making profits off of our families with no justification,” she says.
And Tlaib says she’d like to see some details.
“I think there needs to be control over who is offering insurance, what kind of coverage, the transparency of understanding how they’re calculating the rates. Because right now you can ask one insurance company why it’s a certain rate and they won’t even be able to explain it and another insurance company is giving you a completely different rate,” she says.
Furthermore, Tlaib says that something has to be done.
“People are really tired of it, I think. Talking even to some of my seniors, who haven’t even gotten one ticket, have told me that their rates have gone up $100 to $200 this year alone. And again they rarely drive, they don’t get any kind of tickets,” says Tlaib.
Still, is a city auto insurance company feasible? Caleb Buhs, with the Michigan Department of Insurance and Financial Services, says coming up with cash is the first part.
“At a minimum, $7.5-million surplus, just to get started. There’s an application with our office that needs to be filed and reviewed before anybody’s granted an insurance license. So there’s a number of other factors that go along with that, that would have to be overcome before they could get started on something like that,” says Buhs.
Meanwhile, insurance premiums in Michigan are the 9th highest in the nation.