Could the city of Detroit become an auto insurance company?

Auto insurance - Detroit flag

The mayor has proposed that the city begin its own coverage to help to overcome several problems.

The mayor of Detroit, Mike Duggan, has been drawing quite a bit of attention back to his struggling city has he has proposed that he would begin an auto insurance company that will help to keep the skyrocketing premiums under control in the area.

The announcement was made within the mayor’s State of the City address.

Auto insurance - Detroit flagHe pointed out that recent red lining has led drivers who had already been paying high annual auto insurance premiums of $3,000 to see figures closer to $6,000. The mayor obviously isn’t the only one who is feeling the pinch from these spiking rates and many within the region are saying that the changes that are being proposed by Duggan are long overdue. Rashida Tlaib, state lawmaker, has said that within her district, even seniors who have never received a ticket nor any points have still faced steadily rising rates.

Now that the auto insurance company has been proposed, many are keen to find out how it will evolve.

According to Tlaib, she’s more curious about the details and how the coverage will look if the rates are, indeed, brought down. She is hoping that there will be the ability to provide a more affordable form of car insurance but without having to take away from the protection that the driver requires. She cited the example from Lansing, where she said that the situation includes an offer that says “we’ll reduce it by, you know, a few hundred dollars, but we’re going to cover you less.”

Tlaib isn’t interested in having to settle for less coverage in order to lower the rates. Particularly when that is much needed financial protection. Instead, she says that “I don’t think we need to settle, we need to understand why it’s so high.”

She also went on to point out that the charter for the city does offer the option of opening up Detroit’s own auto insurance company. However the main question remains whether it will actually work. The key is that if the city will be selling coverage, then it will not be for-profit, whereas most of the insurers in the area are businesses and, therefore, function for a profit.

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