September 11, 2006
Governor’s initiative results in rate cut from Auto-Owners Insurance
LANSING – Governor Jennifer M. Granholm today announced that Auto-Owners Insurance has agreed to reduce home and personal automobile rates for eligible members of the Metro Detroit Quality of Life Improvement and the Flint Unification for Urban Equality organizations. The announcement is the result of the Insurance Pooling Initiative, a joint effort of the Granholm administration, the Office of Financial and Insurance Services (OFIS), and the Office of Community and Faith-Based Initiatives that helped community groups and faith-based organizations create purchasing groups that negotiated directly with insurance companies to make home and auto insurance more affordable for good drivers living in urban areas.
“Giving citizens access to affordable insurance regardless of where they live is essential to helping Michigan cities thrive,” said Granholm. “Something is wrong when citizens have to pay thousands of dollars more for insurance just because they live in Detroit or Flint. Through the Insurance Pooling Initiative, those who are responsible in their driving and home protection can be rewarded with lower rates.”
Starting this week, citizens who are members of the two organizations and with good driving and homeownership records may be able to purchase insurance policies through local Auto-Owners agents and be eligible to receive a 10 percent discount. Also, additional discounts may be possible based upon the individual circumstances.
“If a community struggles with a problem, then the community must come together to solve it,” said the Rev. Dr. Charles Adams, pastor of Hartford Memorial Baptist Church in Detroit. “For too long, Detroit residents have paid more for insurance solely because we live in the city. We are committed to changing that, and today's announcement is a great step toward achieving our goal.”
The Insurance Pooling Initiative was built on the principle of group purchasing. The Metro Detroit Quality of Life Improvement Association and the Unification for Urban Equality Association in Flint were organized by religious and community leaders. The two organizations have pooled a group of residents with good driving records and responsible homeowner histories in order to negotiate reduced rates.
“The Accomplishments of the Unification for Urban Equality organization has been remarkable for the period of time that it has been in existence. Certainly our agreement with the Auto-Owner’s insurance company is the icing on the cake,” said Pastor Marvin A. Jennings, pastor of Grace Emmanuel Baptist Church in Flint. “This agreement will bless the greater Genesee County residents with an opportunity to reduce their auto and homeowners insurance. My sincere thank you to the steering committee, the support from our governor’s office, and the citizens of the greater Genesee County area in making this endeavor a reality. To the Auto-Owner’s Insurance Company, this agreement is an indicator of your commitment to the communities within Michigan, as well as it underwrites your company as a ‘Good Corporate Citizen.’ Thank you!”
Citizens interested in participating in the pooling initiative should contact the community organization in their area to determine their eligibility. Metro Detroit residents should call 313-494-4478. Genesee County residents should call 810-743-3900.
The Insurance Pooling Initiative is just one part of Governor Granholm’s efforts to reduce the cost of insurance for residents throughout Michigan. In 2004, the governor proposed banning the use of credit scoring in determining insurance rates, and in 2005, Granholm and Democratic legislators introduced a comprehensive insurance reform package that included a 20 percent rate for all customers.
Current Michigan law allows insurers to write auto and home insurance for specific groups of policyholders at rates that are lower than what they charge to individual policyholders. All group rates are generally lower, because it is less expensive to market insurance to one entire group of people than it is to seek out each of those people individually. Rates also can be significantly lower for groups with better than average loss experience; in other words, groups who are expected to file fewer and/or less expensive claims.
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