Insurance Redlining Eradicated
Creator: The Renaissance Observer
Subjects: Civil Rights
Description: This article discusses the issue of insurance redlining in the cities of Detroit and Flint, Michigan.
Date: July 2006
Original Format: Newspaper Clipping
Relation: Historic Little Rock Missionary Baptist Church
Contributor: Kamilah Stinnett
Transcript: Insurance Redlining has plagued the cities of Detroit and Flint, Michigan for decades. Definitionally, Insurance Redlining is a technique employed by the insurance industry to literally draw a red line around areas; neighborhoods, communities and cities, to justify charging higher rates in the red lined areas for a variety of reasons. Some of the purported reasons for redlining areas, as advanced by the insurance industry are: the size of the area, the number of vehicle thefts reported and/or recorded, the number of home invasions reported and/or recorded, and the amount of overall crime reported and/or recorded.
When an area is redlined, a dragnet approach is applied so taht all persons residing in the red lined area are treated the same in the vast number of respects. Few, if any distinctions are made for the individual histories of the insured, This approach has resulted in insurance rates, in large cites, for instance, that are sometimes two or more times higher than the rates charged suburban dwellers who have driving and home insurance records that are identical to and in some cases, worst than their counterparts who reside in urban areas.
Unfortunately, this dragnet approach does not take into account the fact that suburban dwellers often work in the cities that surround their bedroom communities. The distance that they drive increases the likelihood of an accident as does the fact the when in the city, the become a part of the city traffic numbers that are used to "punish" city dwellers for living in the city. The fact that this system of insuring is so inherently unfair in a democracy, wherein the individual rights of a person are supposed to be of particular importance, breeds contempt and causes dissension between suburban and city dwellers.
Detroiters, in particular, are not strangers to the fight against Redlining. One of the first, if not the first champion of the fight against Redlining in the City of Detroit, was City Council President Emeritus Erma Henderson. Mrs. Henderson was the champion of the fight against Redlining beginning in the 1970s and her championship of the cause continues today. "The division line came, based on where you lived, what color you were and what your aim in life would be. The division came pretty heavily. It was destroying communities, it was leveling people to a low that they could not rise from. We had to take this issue up step by step, we had to come up with a system that would change this Redlining system. I had to prove first that there was a Redlining system. I had letters from people who were in power in government...saying there was a Redlining system. The NAACP statewide, the labor union movement statewide...and sometimes nationally and just good people who came together...including the State of Michigan, all joined with us to fight against Redlining.", said Mrs. Henderson.
Despite opposition from many camps, Erma, as she is affectionately known, fought on. She remembers "...I would not refuse to go and listen to what they (the opposition) had to say but I never ran from a fight in my life, so ...I had not only the Arabs, the ministers and other groups standing with me against Redlining...Redlining became synonymous with my campaign, if you were going to live in Detroit, stay in Detroit, work in Detroit, they had to join me or join the other side and so it became a major issue."
Asked about the enormous amount of power that she was able to amass at the state level, Mrs. Henderson spoke candidly and fondly of the support that she and her cause received from then Governor William Milliken. Henderson recalls of Milliken's support that, "...he understood Redlining better than most republicans because he had a wife who was a democrat.", as she chuckled. Of Mrs. Milliken, Erma remebers that Mrs. Milliken "... would tell him (the Governor) what the truth of the matter was in every case.." Henderson went on to say that "[H]e was happy when enough senators and representatives came together to pass the Bill, they passed a Bill against Redlining. It was a fine Bill. It was something to rejoice about. He (the Governor) came all the way down from Lansing with the pens that were used to sign the Bill into law. I thanked him. It was a long bitter fight. As soon as they were aware that there was a Bill against Redlining, they (unsympathetic members of the Legislature) began to think of ways to get back to the way things were... So we never had the benefit of knowing that we were free from Redlining." With a great deal of pride, Mrs. Henderson said in no uncertain terms, that "...but I can tell you that the memory of the fight is with me yet because a lot of the banks were with me, a lot of the real estate agents were with me, the labor union groups were with me, the Urban League was with me, the NAACP was with me...I'm talking about the state groups were with me. I would go off when called to negotiate but I would not negotiate. This was a non-negotiable issue with me"
According to our readers, this really is a non-negotiable issue. One that has plagued the City of Detroit and many cities like her for far too long. The monies spent on insurance are monies in the City of Detroit which, must, in many cases, be diverted from many other needs. Big Les Little, one of our loyal and faithful readers opines, "Many Detroiters must choose between painting their homes, manicuring their lawns, replacing an aging roof, and the list could go on and paying their insurance premiums on their homes as to their automobiles." These cost benefit analyzes, says Little, are "...unjust, discriminatory and fly in the face of a democratic system wherein all people are supposed to be individually valued."
State Senator Martha G. Scott provided the chronological perspective of the Redlining issue. According to the Senator, "Governor Milliken signed the anti redlining mortagage lending legislation... he also signed the Michigan Essential Insurance Act that many considered to be anti redlining in that it was in direct response to a Supreme Court ruling that said insurance must be made affordable and available to all who qualify or are eligible." Relative to the Michigan Essential Insurance Act, 1979 PA 145, the Senator's office provided that: "The Act amended the Insurance Code to help assure that automobile and homeowner's insurance was available and affordable for all Michigan residents, regardless of where they live. The Act was designed to address the problems many consumers, particularly thoes living in urban areas, were facing after automobile insurance became mandatory with the passage of the Michigan's "no fault" insurance law. Premiums for automobile, and for homeowners, policies were so high that many people could not afford coverage, and coverage itself was often unattainable." It was the Essential Insurance Act that established territorial ratings. This rate system, according to Senator Scott "was one of the most contested issues in the Michigan Essential Insurance Act."
More recently, 1996 PA 98, Section 2111 amended that Insurance code so that territorial ratings are no longer mandatory but are rather, permissive in nature. Section 2111 provides that "...automobile insurance may be grouped by territory." Despite the permissive nature of the Act as amended, urban residents seemingly consistently pay premiums that are based on territory.
Public Act 492 of 2002, the latest amendments to the Insurance Code, was amended, according to Senate Fiscal Agency Bill Analysis S.B. 991: Enrolled Analysis, "[B]ecause it had been more than 20 years since the legislation was enacted, Michigan insurance companies believed that some of the provisions should be updated. This rationale is troubling as it was not prompted by "We the people" but rather "We the special interest". In addition, all of the amendments give the appearance of being skewed against the insured.
Governor Jennifer Granholm's position is that she is " ...committed to ensuring that all Michigan citizens have access to affordable insurance no matter where they live." The Governor's office went on to add that "[S]he has worked with community leaders to establish the insurance purchasing group program for citizens who live in cities that traditionally pay the state's highest insurance rates which will place less emphasis on zip code for determining rates.
She has also proposed a comprehensive insurance reform package which will lower the cost of insurance, strengthen consumer protection, and improve industry accountability." Her plan, says the Governor's office, will reduce rates for all consumers in Michigan, ensure fairer treatment and greater accountability by requiring insurance companies to roll back rates by 20%, prohibit the use of credit scores for determining insurance rates, establish an Office of Insurance Ratepayer Advocate, and provide the OFIS Commissioner with the tools necessary to ensure that consumers are protected and treated fairly.
The clergy has always played a powerful and valuable role in addressing the issues of the community. Relative to the issue of Redlining, this premise continues to hold true.
Here, Greg Roberts, Director of the Governor's Office of Faith Based Initiatives said that the Governor's efforts to work with the clergy began "...in 2005 in her continuous effort to outreach to faith leaders across the state, she...had a meeting...with some of Detroit's leading clergy and at this meeting there was dialogue about the various issues in the City of Detroit that wee important to these pastors and one of the issues that came up of course was insurance rates. There just was a strong consensus that like many in Detroit feel, the rates in Detroit are exorbitant..compared to areas surrounding the City of Detroit, suburban areas and it was the general feeling that good drivers especially and responsible home owners were being penalized not because of their driving records for example but because of their zip code and so that conversation led to Governor Granholm ...continue(ing) to look for ways in which the State can be supportive in working with...community groups...to find ways to ah making (cause) a significant reduction in insurance rates that good drivers and responsible home owners are having in urban areas.
So what...the Governor asked me,...if ...our Office could pull together some of those same faith leaders,...and form a steering (committee)... that our Office...working with the steering committee to help them to evolve into a non-profit organization that then would ultimately negotiate on behalf of any members...and negotiate fairer rates for those who are deemed to have good driving records or responsible home ownership records.
It was also suggested that... we should look at piloting this idea in the City of Detroit and the City of Flint,...which has similar demographics and similar issues as it relates to insurance rates...
Two steering committees...in these two areas...began to meet to develop surveys with the input from the Commissioner's Office and ...began to distribute surveys ...because that would be the first step in beginning to determine the insurance pool that was being created...The second step was to begin the process of forming a 501(c) 3 non profit status for these two steering committees...the groups have formed boards of directors. In Detroit, Dr. Charles Adams in the President of the Board, there are a couple of Vice Presidents; Rev. J.J. Perry, Rev. Howard Fontroy,...Rev. Jim Holley is the Treasurer...Both have chosen name for their organizations...in Detroit...is the Metro Detroit Quality of Life Improvement Association and in the Flint area, its Unification of Urban Equality. Both with the same objective...so individuals that fall into... low risk categories would be offered the opportunity to join this non-profit organization and a component of that non-profit organization would be the insurance pool and these individuals would have their rates negotiated...by this non-profit organization...with any...insurance company that was willing to believe, enter into a win-win situation...Based on a Request for Information...there are several ...companies...they re interested and they are willing to sit down with these non-profits...and to...negotiate favorable...the City of Detroit, of Flint, Saginaw ah etc...to look at ways to make insurance more equitable...to make the 'playing field more level'...there are different areas, different avenues being traveled to make an impact in this, one is a ban on credit scores...which is held up in court right now,...the democratic caucus has been led by the Michigan legislative black caucus to create the legislation in which there would be a 20% reduction in insurance rates across the board in the State of Michigan. ...Senator Martha Scott, Senator Hanson Clark...and others have worked to create potential legislation...
The Governor asked Commissioner Linda Waters to see if there is another way that...could be created in which there could be a significant reduction, such as 20%, 25% in rates that good drivers and responsible home owners are paying in cities like Detroit...Flint, Saginaw, etc. Commissioner Waters... proposed the idea that maybe through a community lead effort...that there could be an insurance initiative pool crated and that pool then could lobby on behalf of its members with any insurance companies that where interested in negotiating rates that would be more favorable and fairer and more equitable for good drivers and responsible home owners.
Of course the goal is to get as lower rate as possible and... that as we amass...people... that insurance companies will be able to find a way to lower rates in such a way that drivers and home owners that fall into low rate categories will have their rates based on their records versus their zip codes.
...Clearly zip code has been a penalizing variable that clearly has increased the rates of auto and homeowners in the City of Detroit and urban areas like Detroit, and Flint. This is very, very exciting because it...it doesn't require legislation.
Historic Little Rock Baptist Church's Rev. Dr. Jim Holley, is again in the forefront of executing strategic change as he devotes much of his energy to the complete eradication of Redlining.
When asked whether he thought the State's proposed "insurance purchasing group plan", proposed for the cities of Detroit and Flint go far enough in terms of correcting the ills that have been heaped upon the residents of the City of Detroit as a result of Redlining, Rev. Dr. Holley responded thusly: "Well not enough, that's the reason why I thinks its important to understand that the ministers and other faith based organizations are putting their own advocacy group together which will indeed negotiate with various insurance.