Four insurance companies have told state officials they want details on bidding to represent a pool of up to 200,000 good drivers and responsible homeowners in Flint and Detroit.
The companies are among more than 65 the state contacted about insuring residents in the two cities. State officials initiated the plan with help from churches and community groups to end territorial rates insurance companies have charged in Michigan since 1979.
“We know it’s a problem,” Linda Watters, director of the state’s Office of Financial and Insurance Services, told the Detroit Free Press. “We’re squarely focused on trying to help consumers reduce their insurance costs.”
The state’s goal is to cut rates at least 25 percent.
The insurance industry has said that where people live is a critical factor in their risk of having accidents, having a car stolen or having a home vandalized or burglarized. Eliminating the use of the factor, the companies say, would result in higher rates for people with less risk.
Watters wouldn’t name the four insurance companies. The pool of good drivers and people who keep up their homes is still being built, too.
Several thousand people have filled out surveys to see whether they qualify, said Greg Roberts, director of the state’s Office of Community and Faith-Based Initiatives. Once the program is operating, the pool will expand to other cities, he said.
The latest initiative avoids taking the issue to the Republican-controlled Legislature, which has been reluctant to impose more regulations on the insurance industry. It would work much like pools of insurance customers formed by credit unions, business associations and various groups to get group discounts.
Watters said she wouldn’t describe the four companies as enthusiastic, “but they’re very interested. They see this as an opportunity to increase their market share.”
The four companies will be asked to submit formal proposals within the next two weeks, and the winning bidder will be picked by the end of the summer. Then people who meet the criteria of a low-risk customer can begin to sign up for insurance that is expected to save at least 25 percent on premiums.
The state and the insurance industry also are urging consumers to shop around as a way of bringing their rates down
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