Michigan Auto Law attorney Brandon Hewitt was interviewed by WZZM 13 of Grand Rapids about Gov. Gretchen Whitmer’s call for an examination of how non-driving factors such as gender and marital status affect Michigan car insurance rates.
Attorney Brandon Hewitt told WZZM:
“Michigan specifically prohibits premiums to be based on sex and marital status, but what we see in Michigan is women being charged 20 percent more than men, and widows out of all people, widows being charged up to 200 percent than a married couple would be charged.”
On May 1, 2019, Gov. Whitmer announced that she was ordering Michigan’s Insurance Commissioner, Anita Fox, to examine – and report on – Michigan auto insurance companies’ “use of non-driving factors to set [car insurance] rates.” The non-driving factors that the governor specifically mentioned were:
- Gender and marital status
- Credit scoring factors
- Home ownership
- The use of “price optimization” techniques to assess how high premiums can be increased before a customer’s loyalty is exhausted
Brandon expressed the same frustration that many Michigan drivers feel about the secretive way that auto insurance companies use these factors to set – and perpetually increase – Michigan car insurance rates:
“Why [any one of those factors] matters to your ability to drive safely, we don’t understand. . . . While they deny that it’s happening, there’s no other explanation that we can find as far as why these premiums vary so widely.”
To watch WZZM’s full interview with Attorney Brandon Hewitt, check out the video below:
What are non-driving factors that affect Michigan car insurance rates?
Non-driving factors that affect Michigan car insurance rates that companies regularly use for determining how much to charge drivers have nothing to do with how well or how poorly a person drives. They have nothing to do with how many crashes a person has caused nor do they have anything to do with how many moving violations a person has committed.
Instead, non-driving factors focus on qualities and characteristics of a person that have absolutely nothing to do with whether he or she is likely to cause a crash and, thus, file a claim for benefits in the future.
Below I will discuss in greater detail how the use of non-driving factors to set Michigan car insurance rates hurts Michigan drivers.
Gender and marital status
The Insurance Code already prohibits using gender and marital status as factors in setting auto insurance rates: “An insurer shall not establish or maintain rates or rating classifications for automobile insurance based on sex or marital status.” (MCL 500.2111(4))
However, that doesn’t appear to be stopping auto insurers from using gender and marital as a basis for increasing Michigan car insurance rates for women (more than 20% on average) and widows (as much as 200% percent more).
The research makes clear that Michigan car insurance rates are higher for drivers with poor credit scores. One study showed that Michigan drivers with poor credit pay nearly $2,000 more per year. Another study shows there’s a 115% fluctuation between the auto insurance prices that drivers with good credit and drivers with bad credit pay for car insurance.
Education, home ownership, occupation
In its study, “Comparing Socioeconomic Status and Auto Insurance Rates in Michigan,” CPAN found:
“The pricing practices of several major insurers revealed by this research are unfair to the Michigan drivers with clean driving records whose auto premiums include surcharges due to their job title, level of schooling, or homeownership status.”
Where a driver lives
Sadly, this has long been a problem for car insurance rates in Michigan and will continue to be until the laws are changed to stop penalizing drivers for where they and their families live.
The extent to which this absurd and arbitrary rule is entrenched in Michigan’s auto insurance industry was best seen by the former Insurance Commissioner’s ruling allowing – and therefore condoning – Progressive Insurance’s rate increase for a “good driver” whose move resulted in a change in ZIP codes.
In typical auto insurance industry fashion, this non-driving factor affecting car insurance rates in Michigan is deceptively misnamed to sound harmless, if not actually pro-consumer.
But that couldn’t be farther from the truth.
Insurers are not talking about optimizing prices for consumers. They’re talking about what they can do to squeeze their optimal price out of their customers.
In a nutshell, “price optimization” involves auto insurers using all of the data they can find about their customers and determining how high they can raise the customers’ premiums before their customers reach their breaking points and decide to take their business elsewhere.