Detroit Mulling City-Sponsored Auto Insurance

November 20, 2014

  • November 20, 2014 at 1:34 pm
    Hmmmm says:
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    I want cheap insurance rates so let’s start our own insurance company……. OMG — eight city counsel members voted and not one voice of reason. The city is bankrupt already.

  • November 20, 2014 at 2:37 pm
    Freedom says:
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    Sargeant, you want to weigh in on this since you are from the area? What a stupid idea for a city in bankruptcy to consider? Where would the reserves be to pay claims, create employment to service policies etc, etc. Perhaps they can make you the CEO to run it.

  • November 20, 2014 at 3:07 pm
    sgoebel says:
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    Wow this is an interesting one. It’s been a while since I’ve worked in the MI auto insurance industry, but I really took a liking to the state and the many fine people in the industry up there. I’m interested to see what sort of rates Pinnacle Actuarial Resources comes up with? From what I remember, the rates in Detroit had been pushed up for a reason. The few companies willing to write non-standard auto in Detroit had been struggling to keep loss ratios out of the red, and this is when they are writing the whole state to factor in the benefit of spreading the risk. If Pinacle comes back with lower rates for the city of Detroit, and the city thinks it’s a good idea to form a carrier to write those rates, They’re going to get a flood of policies which will be heavily concentrated in the city (which could be considered an adverse risk?) and then claims will catch up with production and bite them in the rear. That’s just me thinking out-loud, but if that scenario were to occur, then this $75K would be wasted, not to mention the City’s Carrier’s financial loss on the product’s loss ratio.
    I’m no actuarial… but in my opinion there needs to be changes or limits set on the state’s unlimited catastrophic claims payouts by the MCCA, or do away with the MCCA all together. In most other states, the limit you buy is the maximum your policy will pay out, and so the carriers are not on the hook for hundreds of thousands $$$ over the state minimum limits that are purchased. Maybe this is the perfect opportunity for the first MI Auto product to operate outside the MCCA? Wouldn’t that be nice? Then the market would finally open up to the long list of carriers unwilling to enter the state because of the added liability exposure that the MCCA places on them. Then you’d have a whole new competitive market and lower pricing state wide resulting in more people actually maintaining their insurance policies.
    Also, (if they still have it) get rid of that 7-day insurance policy that no one renews. It lets people register a vehicle on 7 days premium, then drive around uninsured the rest of the year. How that product filing got approved is… well let’s just say I should probably keep that opinion to myself. :)
    At any rate I hope this study does lead to something positive for the auto insurance industry in Michigan. Particularly in Detroit.
    -Steve G-

    • November 20, 2014 at 3:40 pm
      Freedom says:
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      Wow, I thought that 30 day policy in Texas was bad that some have used (not us). Yes, they use it to get licensed, car inspected and then go uninsured all the rest of the year despite Texas having a compulsory liability law on the books. I know of one Hispanic agency who advertises – No license, No insurance, no problem. I don’t know if they can pay a claim since it is probably a Ponzi scheme.

  • November 20, 2014 at 10:43 pm
    Awt001 says:
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    What about a pay at the pump tax? The more gas you buy the more you obviously drive so you pay more for the exposure you represent. Cap CAT losses and don’t let city subsidize the program. Just a thought.

  • November 21, 2014 at 9:21 am
    Neil Harris says:
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    Another reason to stay out of Detroit, as if you needed one.

    I think they will soon find they can’t do it cheaper or better than private companies and the no fault regulations/MCCA are driving the cost upward.

    Perhaps some good ideas could come out of the study, but it is a government based study and it’s MI, so don’t expect much.

    • November 21, 2014 at 9:43 am
      Agent says:
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      Neil, Detroit is going to make a comeback since their bankruptcy plan went through and many of the Progressives have been dismissed from the City Council. Private investment is being used to revitalize the infrastructure. It will still be a long time before they fully recover, clean up the blight etc. However, there are far more pressing needs than do this Auto scheme.

  • November 21, 2014 at 3:39 pm
    David Staggard says:
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    Bad Idea! Keep as many private business in the private sector as possible. Gov’t would get killed in the auto insurance marketplace. Just study the JUA/MTF from NJ in the late 80’s and early 90’s.

  • November 24, 2014 at 2:19 pm
    Realist says:
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    What a

  • November 24, 2014 at 2:32 pm
    Realist says:
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    What a GREAT idea!!!
    The City of Detroit should jump at this opportunity! I am sure they will run it well and be the envy of insurance companies everywhere. So great an idea they even picked out the NAME already – a good first step! Go Detroit go! Who knows – if this works they might even get a supermarket to locate there.



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