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Detroiters launch new auto insurance reform group, fight for lower rates

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Posted at 4:22 PM, Mar 27, 2017
and last updated 2017-03-27 18:24:46-04

Community leaders in Detroit are launching a new effort for auto insurance reform, which they hope will lower rates in the city of Detroit.

It's called the Detroit Alliance for Fair Auto Insurance.

The neighborhood leaders, pastors and community advocates announced the initiative at the Salem Memorial Lutheran Church in Detroit's Cornerstone Village neighborhood.

They say they want to educate city resident about Michigan's auto insurance, while empowering them to be advocates for insurance reform.

“Detroit pays the highest insurance premiums in the country and it has to stop,” said Darell Reed, pastor at Spirit of Love Church said in a news release. “We have insurance companies charging Detroiters $5,000 a year for a policy and then the same driver can move just outside the city border and have their rates cut in half. If that’s not redlining then I don’t know what is.”

Reed, who helped launch the organization, also blasted insurance companies for using non-driving factors like credit scores when figuring their rates for Detroiters.

“Credit scores have absolutely nothing to do with how good of a driver you are. You could be a low-income Detroit resident with a perfect driving record but still be charged more than someone in the suburbs with several accidents on their record but a perfect credit score,” said Reed in a news release. “The only ones who don’t see the injustice in that are insurance companies.”

City Council President Brenda Jones also spoke at the launch, saying she will work with Detroit's representatives in Lansing to find solutions.

“I pledge that I will be in constant contact with our Detroit delegation to make sure they know that this isn’t a one or the other situation. We need reforms that both lower costs for Detroit drivers while also giving accident victims that care they need,” said Jones in a news release.

Pete Kuhnmuench, executive director of the Insurance Alliance of Michigan released the following statement in response to today's event:

From Detroit to the Upper Peninsula, consumers are demanding reform to Michigan’s outdated, broken no-fault auto insurance system. IAM urges lawmakers from both parties to heed the call of Mayor Mike Duggan by rolling up their sleeves, getting to work and passing reforms that make auto insurance more affordable. Lawmakers can start by working to reduce fraud and scams, which cost the average Michigan family hundreds of dollars a year in additional premiums.

We also recommend a set rate schedule for medical procedures, just like other types of insurance have in place, to lower the overall cost of auto insurance. Furthermore, allowing auto insurance companies to offer plans with different levels of medical benefits, much like a cell phone plan or cable TV package, would allow Michiganders to have the flexibility to choose what works best for them and what they can afford.

Cracking down on fraud, allowing insurance companies to negotiate to reduce hospital overcharging, and promoting choice and competition are the best ways to bring relief to consumers in Detroit and across Michigan.

The Detroit Alliance for Fair Auto Insurance says they will be holding town halls about their efforts in the near future. You can get more information at DetroitFairInsurance.org.