Thursday, May 2, 2019

Gov. Whitmer targets insurers' discriminatory practice of using non-driving factors

Posted By on Thu, May 2, 2019 at 11:09 AM

click to enlarge STEVE NEAVLING
  • Steve Neavling

Gov. Gretchen Whitmer ordered a study on Wednesday to determine how non-driving issues, such as credit scores and education, affect the cost of auto insurance premiums.

Michigan has the highest auto insurance rates in the nation, and the costs are even higher for Detroiters.

The state allows insurance companies to use credit scores, education, zip codes, occupation, and homeownership as ratings factors for premiums. Critics say those factors, which have nothing to do with a person’s ability to drive safely, discriminate against lower-income people who can least afford auto insurance.

In March, U.S. Rep. Rashida Tlaib introduced legislation that would make it illegal for auto insurance companies to use consumers’ credit scores in calculating insurance rates.

The average annual premium in Detroit is $5,414, compared to $1,427 nationally. As a result, Detroiters on average spend 18 percent of their income on insurance. Anything beyond 2 percent is “unaffordable,” according to the U.S. Treasury Department’s Federal Insurance Officers.

"Auto insurance rates must be fair and reasonable," Whitmer said in a news release. "We must take a hard look at how auto insurers are setting rates to ensure these practices are lawful and to determine how we can achieve complete and lasting reform for Michiganders."

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