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EDITORIAL

Keep working to lower insurance rates

The Detroit News

Rates of auto theft in Detroit are dropping. That's good news for residents and businesses in a city with the highest auto insurance rates in the country.

If auto thefts were the only determinant of auto insurance rates, premiums for Detroit residents would decrease substantially based on the improved statistics. But with other factors at play – including no-fault insurance laws – astronomically high rates will remain, and deter those looking to move or set up a business in the city.

Auto theft in Detroit is 20 percent lower than it was last year at this time. In 2005, there were 20,000 auto thefts in the city. That number so far this year is just above 9,000. That's definitely an improvement, and if the trend continues, the theft portion of premiums in Detroit could decrease drastically, according to the Insurance Institute of Michigan.

But the crime rates are still high compared to other big cities, and insurance premiums take all catastrophic events into account, not just theft. Detroiters pay 165 percent more than the national average for auto insurance, which amounts to many thousands of dollars per year per policy.

"People don't understand why it's so much more," said Lori Conarton at the institute. "And it is a problem for attracting people to come here."

Carjackings in particular pose a double threat to car security and, more importantly, personal safety. Though they've decreased, the number is still higher in Detroit than any other big city in the U.S.

Last year carjackings were down significantly to 701 from 1,231 in 2012. In 2014 there have been more than 480, showing continued improvement. But that's still three times higher than New York City's rate, which despite the predominance of mass transit, has more cars than Detroit.

Much credit is due to the increased effectiveness of the police department the past year under Chief James Craig. The department also previously centralized carjacking investigations and worked with the FBI on them. Another main factor contributing to Detroit's still high rate of auto insurance is Michigan's no-fault insurance law. The law requires all parties in a reported accident to claim responsibility for injuries and medical claims. That includes unlimited, lifetime medical coverage.

Detroiters report a higher number of medical claims than residents of other communities, pushing up the city insurance rate. Fraud in these medical claims is also abnormally high. Questionable medical claims from accidents in Detroit jumped 124 percent between 2009 and 2011.

It's also estimated that 60 percent of Detroit drivers illegally don't have auto insurance, due in part because of its high cost. That shifts the cost burden of uninsured motorists who get in accidents onto drivers with insurance. And with rates so high, many residents simply register their cars at parents' or other relatives' homes in nearby suburbs where policies are less expensive. That creates an even smaller pool of actual registered Detroit drivers, which again drives up cost.

The state Legislature should pursue insurance reform, along with a bill that would create a lower-cost option for low-income enrollees. It should also pursue a fee schedule that would outline standard costs for medical claims and help prevent fraud.

These reforms and increased security on Detroit's streets would do much to reduce insurance rates in the city, but fewer car thefts are a good start and should provide at least some relief.