Why Will No One Say The Reason Detroit Has the Highest Car Insurance Rates is Because it is a Black City?

Executive Summary

• The articles that explain that Detroit has the highest car insurance rates in the country for some reason leave out the fact that the city is mostly black.

Introduction

As with any issue that relates to blacks, the topic of why Detroit has the highest car insurance rates in the country is aggressively censored with all the articles we found coming up with every reason for this high cost, except for the obvious one.

Our References for This Article

See this link if you want to see our references for this article and other related Brightwork articles at this link.

Article Quotes

The following quotes illustrate the degree of censorship on this topic.

Minorities Are Charged Too Little for Auto Insurance?

LANSING – The independent nonprofit journalism organization ProPublica recently published a report examining auto insurance premiums and payouts in California, Illinois, Texas and Missouri.

The report finds that insurers charged as much as 30 percent more for premiums in zip codes where most residents were minorities, compared to white neighborhoods with similar accident risks or costs.

ProPublica notes that many auto insurers included in the study operate nationally, which means that “minority neighborhoods across the country may be paying too much for auto insurance, or white neighborhoods, too little.”

Which minorities? Is this true of all minorities? For example, do insurance companies charge Asians more than whites?

Observe that the assumption is that all racial groups have the same risk profile or propensity to submit claims and that any difference in price charged is due to racism on the part of the insurance company. However, considering that algorithms determine the rates insurance companies charge, what evidence is there that all racial groups have the same costs to insurance companies.

“Detroit drivers pay some of the highest auto insurance premiums in the country and insurance companies cannot justify it any longer. It doesn’t make sense that drivers are getting charged significantly more for premiums simply because they live on one side of 8 Mile versus the other, but that’s exactly what’s happening,” said CPAN President John Cornack.

Insurance rates always vary depending upon where the car is domiciled. John Cornack appears to think that all insurance rates should be the same. But is it fair that Los Angeles drivers pay higher insurance rates than those in Sioux Falls, SD? Because that is the logic presented in this quote. Insurance companies disagree with John Cornack that rates should be the same regardless of where the car is domiciled.

“The person living on the Ferndale side of 8 Mile still is driving the same roads and would be going to the same hospitals, yet the Detroit resident gets charged far more,” Cornack said. “That sounds an awful lot like redlining to me and we are calling on the state to look into it.” – Auto No Fault Law

In that case, all auto insurance and insurance are redlining. The fact is black areas have much higher claims than other areas. That is what the algorithms of the insurance companies are picking upon.

For Some Unknown Reason, Flint Also Has High Auto Insurance Costs?

The following quote ignores the high black population in another city.

The average cost of insurance premiums in the city is $5,414 per year, more than twice the state average and nearly four times the national average. Residents therefore flout the law by registering their policies at addresses outside the city, where insurance costs less than half what it does inside, or by driving without any insurance at all. Good numbers are understandably difficult to come by, but it is now estimated that up to 60% of Detroiters drive without insurance. – The Economist

Yes, this means that insurance premiums for those who do buy auto insurance will increase to cover the uninsured drivers. This also brings up how Detroit authorities allow 60% of the population to drive without auto insurance, as it is normally required to register a car.

The quote continues..

The problem is not just limited to Detroit. Costs are also spiralling out of control in Flint, another Michigan city down on its luck. Car-insurance premiums there have spiked 30% since the city’s water crisis in 2014, and now stand at $3,507 per year. In fact, car-insurance premiums in the state are so hugely regressive that those living in the poorest zip codes, where the typical family lives below the federal poverty line, can expect to pay twice as much to insure their cars. – The Economist

Did it escape the notice of The Economist that Flint, Michigan is 54% black? Detroit is 81.5% black. Blacks involved in more accidents are more likely to be uninsured, engage in more insurance fraud, etc.. These are all things that drive up the cost of insurance.

Falsifying the Real Address of the Insured Car

It’s open secret that many move into Detroit, but not quite, by keeping their voting and registration address outside the city. There aren’t exact numbers, but it’s often talked about that when you move into the city that you keep your legal address at a relatives house. – Daily Detroit

Yes, this means that fewer people are paying the insurance in the blackest parts of Detroit, so the leftover others must pay more.

Rates Not Driven by Theft?

First, let’s get rid of the most common misconception — that car insurance rates are high because of theft. When it comes to numbers, theft has little to do with the cost.

Theft makes up just 18 percent of your car insurance premium, on average. – Daily Detroit

This is shown in the following graphic from Detroit Free Press.

However, this 18% is far higher than the national average. Because of the very high black population, theft is much higher in Detroit. In fact, all areas of claims are higher in Detroit. But it is also true that personal injury protection is the highest percentage of the different categories.

It is Mostly the PIP?

Finally, the author of the article tells us the reason for the higher insurance.

It’s mostly about the PIP — Personal Injury Protection. And there are multiple factors making the price so high.

What is PIP? It’s medical coverage in case you have an accident. Michigan law mandates lifetime care, over and above whatever health insurance you may carry. But that’s not all.

There are double the number of PIP claims in the city of Detroit — and they’re for almost double the claim amount than in the suburbs. About $59,000 per claim in the city vs. $30,000 in the suburbs.

Why? There’s not one answer here, either. But here are a couple of causes of prices of auto insurance in Detroit to be so high. – Daily Detroit

One answer is that blacks are far more likely to try to submit a fraudulent claim or exaggerate the claim. Michigan has no-fault insurance, but it does not make blacks submit fraudulent or exaggerated claims. This article is trying to isolate the population from the higher negative outcome. And Michigan is not the only state with no-fault insurance. One article I checked said twelve states have no-fault insurance: Florida, Michigan, New Jersey, New York, Pennsylvania, Hawaii, Kentucky, Massachusetts, Minnesota, North Dakota, and Utah. Still, another article from Nationwide Insurance stated 18 states were no-fault states. In either case, there are several comparison states to see if the claim regarding no-fault driving Detroit’s number one ranking in car insurance cost is attributable to Michigan is a no-fault state.

If all auto insurance costs were due to Michigan having no-fault insurance, why are these other states as high as Detroit? Curiously, such a claim would be made about no-fault insurance, but then no comparison be made to other states that are no-fault, and that the articles would make it sound like Michigan is the only state with no-fault insurance.

Comparing Detroit to Cleveland

A Free Press examination found that auto insurance premiums in Cleveland are often thousands of dollars a year lower than the highest-in-the-nation rates that Detroiters pay.

Cleveland’s low rates persist even as insurers in Ohio use the same non-driving factors when setting premiums that critics say unfairly penalize people in high-poverty cities like Detroit. Those factors include drivers’ home ZIP codes, a version of their credit scores and whether they have four-year college degrees. – Detroit Free Press

People say a lot of false things. For example, a large percentage of the population in the US thinks they have a personal angel. Saying that “critics” or “some people” think or say something is a way of introducing non-evidence in a way that conjures up ideas of evidence.

Secondly, Detroit is not just “high poverty,” it is 81.5% black. There are poor areas in West Virginia that are nowhere discussed as the higher car insurance cost areas of the US.

Some Say?

The quote continues with “some saying,” something introduced as evidence that the item stated is true.

Some say this insurance industry practice is especially discriminatory to black people —tantamount to “redlining” areas where they live — and a major reason for Detroit’s sky-high rates that can exceed $3,000 a year to insure a single vehicle. “We’re simply charged for being black in Detroit,” state Rep. Sherry Gay-Dagnogo, D-Detroit, said during debate in Lansing last fall on a proposed auto insurance overhaul that was voted down. – Detroit Free Press

Do they present evidence this is true?

The study that is often quoted is from ProPublica, an excellent investigative journalism entity that we have referenced on many occasions on this website. Here are some quotes from the ProPublica study.

Our analysis of premiums and payouts in California, Illinois, Texas and Missouri shows that some major insurers charge minority neighborhoods as much as 30 percent more than other areas with similar accident costs. In some cases, insurers such as Allstate, Geico and Liberty Mutual were charging premiums that were on average 30 percent higher in zip codes where most residents are minorities than in whiter neighborhoods with similar accident costs. – ProPublica

This study says “as much as 30%.” That is not the average of what the study found. The average is much lower. However, one can’t only look at accident costs. Vandalism, theft, insurance fraud are all higher in black areas than in any other area. Insurance companies naturally are going to have to be compensated for these other costs.

Then the quote continues.

In Illinois, of the 34 companies we analyzed, 33 of them were charging at least 10 percent more, on average, for the same safe driver in minority zip codes than in comparably risky white zip codes.

Ten percent is not that much more. Of course, the quote says at least 10 percent more. But the study is unclear on the other factors aside from higher accidents in the minority (read black) are driving this.

The disparities persist even in affluent minority neighborhoods. Consider Pernell Cox, a Los Angeles businessman who lives in a wealthy enclave in South Los Angeles sometimes referred to as the “Black Beverly Hills.” His insurer Safeco, a subsidiary of Liberty Mutual, charges 13 percent more for a 30-year-old female safe driver in his neighborhood than in a zip code with comparable risk in Woodland Hills, a predominantly white suburb in north Los Angeles. – ProPublica

Is there really anything that shocking about a 13% higher rate charged on insurance? Couldn’t other discrepancies also be found between zip codes of areas with similar racial compositions? Did ProPublica check that as well or stop when they found discrepancies in between areas of different races? Is ProPublica aware of the discrepancies in the payouts for different medical procedures by insurance companies? Is ProPublica aware that insurance companies believe that they have no objective outside of profit maximization? That is how private for-profit and lightly regulated entities function. If you can charge any group more than another group, and you don’t do so, according to current corporate theory, it is a dereliction of one’s fiduciary duty to shareholders not to charge the maximum price. The system that the major media, economists, think tanks, and politicians tell us is so great — corporations with no public service function and only a responsibility to shareholders, which is a euphemism for rich people.

Insurance Companies Deny Transparency?

Individual insurers don’t publicly release their losses on a zip-code level, and have long resisted demands for that level of transparency. – ProPublica

Yes, that is correct. Insurance companies prefer to operate in darkness. This is why it makes far more sense to eliminate insurance companies and for governments to provide insurance. Costs drop like a stone when governments provide insurance because no police need to be written, there are no marketing costs, the government does not need to profit. This is why eliminating insurance companies would drastically reduce the costs of health care.

How Does the Insurance Company Know the Race of the Insured

In Marshall’s day, redlining was often defined by refusal to provide loans, insurance or other services in minority neighborhoods. But as those practices became public and controversial — due in part to Marshall’s activism as an attorney for the NAACP — insurers stopped asking applicants to identify their race. – ProPublica

This is a good point, but it works against the argument of ProPublica. Insurance companies no longer ask for the applicant’s race. So how is the insurance company discriminating based upon race? They are discriminating based upon the zip code, and some zip codes, like parts of Detroit, are extremely black, leading to high costs — and to things like falsifying the location of where the car is driven, insurance fraud, a higher percentage of uninsured drivers and other factors all of which further increase the insurance rate.

Time for More Subsidies for Black Drivers?

In 1978, Los Angeles County Supervisor Kenneth Hahn pleaded with Congress to rectify the stark inequities of territorial ratings. He said the same good driver would pay over $900 if he lived in Watts, a poor black neighborhood, and just $385 if he lived in predominantly white San Diego County. – ProPublica

This quote implies that the only factor that insurance companies should be concerned about is the driver. However, this is not true. If I stay in Seattle but then spend a month in Recife, Brazil, I might be the same person, but my risk profile has completely changed to my location. I don’t engage in robbery or violent crime, but if I spend time in Recife, Brazil, my likelihood of being involved in a violent crime very significantly goes up. Bad drivers don’t just crash into other bad drivers. Thieves don’t only steal the cars of bad drivers. This follows a long-established pattern where blacks want to act like blacks but want the outcomes of whites. The only way this is possible is if resources are pulled from whites to subsidize blacks. However, blacks already receive an enormous subsidy from whites. Blacks in white countries benefit from living in a society they could have never created, using technologies and infrastructure they could have never invented. There is no society that blacks have created, where whites get to free-ride off of things they never invented but which a black society handed over to them. Even if blacks are somewhat overcharged for insurance, that should be the smallest of small potatoes compared to how they benefit from white societies. Blacks also benefit from being able to interact with whites and being allowed into white areas. This is also not viewed as a benefit but as a right by blacks.

Something left out of all of this is that insurance is a white or European concept, like schooling. Blacks are already benefitting from an insurance system, although it is far less efficient than if the government performed the same role. However, there is no gratitude for insurance even existing. Insurance in African countries is minimal. See the following graphic.

Yes, 70% of all insurance written in Africa is written in a country created by whites. It is more likely than not that most of this insurance is written to whites rather than blacks. This further means that if these blacks that live in the US lived in Africa, they would have access to very little insurance. Did blacks invent the idea of insurance and then share it with other races? Would blacks in the US prefer to be insured by US insurance companies or by African insurance companies? What does one imagine an all-black insurance company would look like? How many of those claims would be paid out? 

See the following quote.

The level of maturity in these six regions is low, relative to global reference countries, as measured by insurance density (premium per capita). While most African countries have experienced double-digit insurance growth in CAGR in local currency over the last five years, this has mostly been driven by economic growth, rather than deepening market penetration. – McKinsey

Yes, insurance is very small in Africa. And it was brought to Africa by whites. There is a good chance that without interaction with whites, that insurance would still not exist in Africa.

Blacks Have the Same Risk Profile as Whites?

Observe this quotation.

We found that households in minority-majority zip codes spent more than twice as much of their household income on auto insurance (11 percent), compared with households in majority white neighborhoods (5 percent). The U.S. Treasury Department has defined auto insurance as affordable if it costs 2 percent or less of household income.

This is completely deceptive. It implies that the entire reason for the difference between blacks and whites is discrimination. However, the ProPublica study found averages somewhere in the low teens due to potential discrimination. The lion’s share of the difference is black behavior. Secondly, this study appears to be using the term “minority” as a euphemism for blacks. Why are Asians or Latinos being left out of the ProPublica analysis? The reason is easy to guess. They can’t find a discrepancy for these groups.

ProPublica Takes an Absurd Turn?

The following quote shows a lack of awareness on the part of ProPublica.

After the Rodney King riots in Los Angeles in 1992, when people took to the streets to protest the acquittal of policemen who had been filmed beating a black driver, it turned out that about half of an estimated $1 billion in losses from destroyed businesses and homes were not covered by insurance.

California Insurance Commissioner John Garamendi blamed discriminatory practices by the nation’s insurance companies. Touring the battered ruins of the city a month after the riots, he told a New York Times reporter, “I am convinced redlining exists. The bottom line is either you can’t get or can’t afford it.”

Well, first, who performed the rioting during the Rodney King riots. Only one racial group riots violently and uses virtually any excuse to loot stores and engage in property destruction. The same thing happened in multiple cities over more than a year due to the George Floyd incident. Secondly, the fact that 1/2 of the businesses did not have insurance is not evidence of redlining, and the fact John Garamendi was convinced of something does not make it true. Secondly, the riots themselves showed the risk in black areas of high degrees of property damage.

Again, as no other group in the US behaves in that way, black areas will have higher insurance costs.

From the mid-1980s to 2021, South Africa added around 27 million blacks from a base of 20 million. Do you think this might have increased the cost of insurance? After engaging in widespread property destruction and looting, the next step for blacks is to complain about discrimination in insurance. One way to reduce insurance rates is to reduce one’s looting and property damage. What do blacks want? Do they want to go bananas and destroy property at the slightest provocation, or do they want lower insurance rates — because you can’t have both. 

Insurance Redlining?

N A REDLINING MAP OF CHICAGO created by a federal housing agency in 1940, Otis Nash’s neighborhood, East Garfield Park, is colored red for “hazardous.”

“This is a mediocre district threatened with negro encroachment,” the map states. “Most properties are obsolete and the section is very congested.”

The term redlining is sometimes thought to have originated with these maps, which were created for many American cities by the federal Home Owners’ Loan Corporation between 1935 and 1940. The maps were used to assist loan officers in deciding which properties were worth financing. East Garfield Park was built as a community of townhouses for factory workers. Like much of Chicago’s West and South Sides, it became a predominantly minority neighborhood in the ‘50s and ‘60s as redlining discouraged investment and the city built an expressway and low-income housing projects in the area. Whites fled for the suburbs.

One witness, undertaker Charles Childs, said the premiums on his two cars for personal use, a Cadillac and a Mercury, had risen from $450 in 1970 to $950 in 1971 and he had to drop coverage for his fleet of undertaker vehicles.

“As rates have been increased in the inner city, they have substantially decreased in essentially white areas,” Millard D. Robbins Jr., the head of the Insurance Brokers Association of Chicago, said at a press conference. “This creates a surtax on blackness and a discount for being Caucasian.” – ProPublica

First, redlining is rational. Blacks ruin areas that they move to. Whites don’t flee for no reason. Secondly, as for the latter part of the quote, there is a surtax for blackness. Blacks cannot function like whites and are prone to violence and impulsive behavior. All of the crime statistics show this is true. Again, there is a false assumption by blacks that they are white and deserve white outcomes. What they don’t realize is that blacks are not even adjacent to whites. Whites have the highest levels of civilizations, then come North Asians, and so on.

Black or African societies have the lowest level of intellectual, logical, and technological accomplishment and the lowest ability to create functioning societies of any race. Why is this fact not stated publicly? Blacks should be comparing themselves to Latinos, not to whites. In the same way that I should be comparing my basketball skills to that of boys in high school, not NBA players.

This is not explained to either black or to whites that cover black topics. Each continually proposes an equivalence that does not exist. This is what makes blacks race scammers. They continually create false equivalence claims to whites.

Blacks Perform Self Redlining?

ProPublica finishes up with a personal story meant to pull at heartstrings.

Despite scraping to make ends meet, Nash bought collision, comprehensive and liability, as well as rental reimbursement, emergency road service and uninsured motorist coverage. “I got everything,” he said, “because you hear so many horror stories.”

He’s dependent on his car. He needs it to go to work, to shop for groceries now that the local pharmacy closed in his neighborhood and the dollar store burned down, and to take his 7-year-old daughter out to the suburbs where she can ride her bicycle in a park that is safe from crime. – ProPublica

Why did the pharmacy close? Were blacks bad customers? Who burned down the dollar store? Were those Norwegians? Did the store being burned down increase insurance rates? Why is the park not safe from crime? Is the crime perpetrated by Swedes? If the answer is “poverty,” I have an analysis that shows the number one predictor for violent crime in the US has nothing to do with poverty and is best predicted by the percentage of blacks that live in that state which you can read at What is the Most Predictive Variable of the US Murder Rate.

“I don’t even walk up and down the block with my daughter,” Nash said, adding that it’s not unusual in the summer to “hear gunshots during the day.” – ProPublica

Again, are these people shooting guns mostly Swedish or Norwegian? Is the answer to developing programs to reduce Scandanavian violence in black neighborhoods where blacks are being subjected to victimization by Christian men and women named Ingrid? Or again, is this due to racist guns, as I cover in the article Are Racist Guns Responsible for the High Number of Shootings in Black Areas?.

Is this violence and property destruction also the fault of the insurance companies?

ProPublica Pegs People’s BS Meter

Some of the comments on this ProPublica article seemed to smell that something as off as you can tell below.

Comment #1

If the premise of this article is correct, in that insurance companies are overcharging minority neighborhoods, then the researchers and writers of this article stumbled onto an amazing business opportunity. Here is suggestion, why don’t they pool their money together and start an auto insurance company targeting those minority neighborhoods, then they can swoop in and undercut all of those racist insurance companies (who I am sure all got together in a smokey room to set rates and screw the little guy). They will certainly make a lot of money! Good luck with your future endevours!

This brings up a good point.

Comment #2: 

Weird how this doesn’t seem to happen. It’s almost as if the authors of this article are excluding some important factors from their analysis.

Yes, what could that be?

Comment #3

Several reasons.

1 What this article fails to mention is that although they are judging similar accident rates, minority neighborhoods tend to have higher rates of vehicle vandalism, car break-ins, and stolen cars. All of which cost insurance companies a lot of money.

Comment #4

It’s possible this is due to Simpson’s Paradox

From the article:
“Our analysis examined more than 100,000 premiums charged for liability insurance — the combination of bodily injury and property damage that represents the minimum coverage drivers buy in each of the states. To equalize driver-related variables such as age and accident history, we limited our study to one type of customer: a 30-year-old woman with a safe driving record. We then compared those premiums, which were provided by Quadrant Information Services, to the average amounts paid out by insurers for liability claims in each zip code.”

So they are comparing total payouts across all coverage levels to the premiums paid at a single coverage level. To see how this could result even if fair pricing practices were in place, consider a “safe” neighborhood where people bought higher coverage amounts and an “unsafe” neighborhood where people bought lower coverage amounts. At any given fixed coverage level, the “safe” neighborhood would pay out less than the “unsafe” neighborhood, but overall the “safe” neighborhood would pay out more due to the higher average coverage levels.

ProPublica – Is coverage mix controlled for in your study?

As I pointed out earlier, it appears that ProPublica stopped when they found racial discrepancies and did not dig deeper. If you looked at several variables, you would find other discrepancies.

Comment #5

Actuary here. The study is flawed by comparing premiums for a specific type of risk to losses from a whole mix of risks that vary by location. There is absolutely no incentive for insurance companies to discriminate like this. We make money by undercutting the competition and if they were overcharging folks who were genuinely better risks we’d swoop in and drink their milkshake. There’s no racism where there’s money to be made.

Comment #6

Female drivers generally pay less than men… but who cares about a gender discrimination spin. Young drivers generally pay more than older drivers… but who cares about an age discrimination spin. Single drivers generally pay more than married drivers… so what. None of those articles would draw all of these insurance “experts” out into a keyboard battle over who’s right, wrong, liberal, conservative, racist, etc.
Race bait taken by all of you…

Comment #7

I work in the ins industry and I know that many insurance companies erroneously, (not sure if its intentional or not) use credit data and other economic indicators to rate on, but I’ve looked at the data and in fact most of their rating processes are completely unjustifiable (other than “what the market will bear” justifications).

So it’s commonly known that personal insurance often uses credit data. The justify this with the “assumption” that people with “bad credit” are probably less responsible and thus higher risk.

The data does not bear this out. What is true is that people with bad credit can often be charged more because they have fewer options and leverage.

People with bad credit tend to have LOWER insurance costs actually. Why? It’s pretty obvious. People with bad credit are less likely to have valuable property, are less likely to file claims, and are less likely to file lawsuits to challenge payouts.

Comment #8

This is an unfortunately naive and misleading article. You assume that a neighborhood is not made up of its residents. Do you believe that the other residents of the “Audi neighborhood” have a 1/5 chance of carrying insurance? Or that the drivers in that area have a credit score below 700?

The primary differences have little to do with race. It is all numbers. Statistics. Poorer neighborhoods regardless of crime tend to have a very high rate of uninsured/underinsured drivers. Further, since 95% of insurers factor your PERSONAL credit score which is independent of race into the policy. It is a little easier to understand how insurers try to mitigate their risks. But, in you book it is all about race. What you fail to point out is that a caucasian in that same ethnic neighborhood would would receive a similar policy.

Comment #10

Sorry, but the authors completely missed the issue, and only noticed a by-product. This has absolutely nothing to do with neighborhoods. If actuarial loss data for the neighborhoods is the same, the geographic rating elements will be the same. The reason those in poorer neighborhoods pay higher premiums on average is based solely on average credit score. Credit scoring is part of almost every company’s rating algorithms. You guys collected and shared symptomatic data.

Comment #11

Credit ratings overlayed on loss data is in direct correlation with insurance rates. Actuarially, that is a fact that cannot be argued. Folks with a lower credit score are much more likely to turn in minor claims because of their financial situation. Say you have comprehensive coverage and a policyholder with good credit and one with bad credit. Assume the deductible for each policy is $500. Let’s say each has a covered loss of $1000. The poorer credit individual is MUCH more likely to turn in the claim because they either need the money and won’t repair the car or they don’t have the money to cover the claim on their own. A policyholder with good credit is likely to pay the $1000 out of pocket, knowing that it will prevent their future premiums from going up and knowing they’re only getting $500 from the company anyway. Additionally, those with poorer credit are statistically proven to not take care of their autos as much as their better credit counterparts. Someone with good credit can buy new tires, and keep maintenance up to date.

Back to the Cleveland Comparison

The Difference in the Insurance Between Cleveland and Detroit

The Zebra, an insurance comparison website, looked at both cities in its nationwide auto insurance analysis between September and December 2017. The analysis was based on a 30-year-old single male with a good driving history driving a 2013 Honda Accord EX.

It found Cleveland with a $1,277 average annual auto premium for comprehensive coverage. In Detroit, the average was $5,414.

“Detroit is more than three times what Cleveland is, which is truly remarkable when you think of the proximity of the cities and the states,” said Alyssa Connolly, the website’s communications director.

The ProPublica article found far lower discrepancies between black and white areas, averaging in the low teens, even though the ProPublica article left out many important factors. However, using the ProPublica estimate, there is a chasm between the low teens and hundreds of percentage points difference. However, recall, many people in Detroit falsify their address to the insurance company, which means that others that do not falsify their address must pay more. Detroit is an example of a city in complete freefall. Some stoplights go months without being fixed.

Drifting leads to more accidents, and drifting is popular in Detroit. The ProPublica article and other articles leave out what happens when a city becomes dominantly black. Look at how one of the cars is driving in this video. It is driving at high speed right next to a crowd of people and could easily lose control and careen into the crowd. 

And it is not just driving. Look at what a predominantly black-controlled city did to what a white culture left the black population. Why couldn’t the black population and black run management even maintain buildings in Detroit? 

An Actuary Speaks

“That’s why it’s more expensive in Detroit, because the people you’re grouped with are more likely to have a claim, and that claim has a likelihood of being far higher than in Cleveland,” said James Lynch, chief actuary at the New York-based Insurance Information Institute, an industry-funded organization.

Why is the likelihood far higher in Detroit? Well, Detroit is 81.5% black, while Cleveland is 51% black. So that is a far lower percentage of blacks. In Cleveland, the blacks that live there have the civilizing force of non-blacks to keep the city from completely tipping over into chaos.

Urban Factors?

But it’s the large expense of no-fault benefits on top of general urban factors that makes insurance in Detroit so expensive. Insurance companies use ZIP codes to contain the costs of claims to the areas where people who generated the claims live, raising premiums for everyone who garages a car there.

What are “urban factors?” Urban has become a euphemism for black. Can the Detroit Free Press use the term black if it is in a negative light?

Differences Between Detroit and Cleveland’s Risks

She noted how insurance rates reflect numerous factors, likely accounting for how Cleveland has a smaller population than Detroit (385,809 versus 627,795 by the latest estimates), as well as less than half as many reported auto thefts and roughly 25% fewer vehicle crashes.

Yes, there are 60% more blacks in Detroit than in Cleveland. Therefore, there are going to be far more claims than in Detroit.

It’s All Because of No-Fault Insurance?

Instead, it’s another example of how Michigan’s one-of-a-kind no-fault insurance system, which mandates that all motorists buy coverage for potentially unlimited medical benefits, forces Detroiters to pay so much more than anyone else. Still, “I don’t think any of those other factors are significant enough to make rates three times what they are in Cleveland,” Connolly said. “All signs seem to be pointing to the no-fault coverage laws in Michigan.”

It is not at all clear that this fully explains the difference. As I explained earlier, other no-fault states do not have cities with Detroit’s insurance rates.

Should Detroit Create its Own City Insurance?

The following quote describes the efforts to rebuild Detroit and the impact of such high insurance rates.

People that are used to lower insurance premiums – such as $1000 to $2000 a year – will have a difficult time adjusting to their new-found rates if they move to Detroit. Does the low cost-of-living offset the insurance cost? The sad answer is, “probably not.” Mayor of Detroit, Mike Duggan, said that Detroit could create an insurance company sponsored by the city that would offer “fair” auto insurance rates. So far, the proposal has gotten as far as getting $75,000 approved for a consultant to study the idea from all angles to try and figure out why Detroit is experiencing such high auto insurance prices. Creating a “city-sponsored insurance company” would be the first time that such a program would be implemented in a U.S. city. – Auto Insurance Quote

This is a good idea. Any replacement of a for-profit insurance company with a government entity means an immediate drop in costs like marketing. The government also benefits from insuring everyone, which creates huge economies of scale and efficiency. However, the problem is that this should be done by the government, which controls the money of the government, which is not the states, but the federal government and the Fed. To do this, a state, as it cannot create money out of the air (like, say, a bank), would have to issue a municipal bond, which is a problem as Detroit just came out of bankruptcy. Michigan should first create a state bank, as with the Bank of North Dakota. This would allow it to fund insurance for Detroit residents without issuing a bond or paying any interest.

However, while any government will save a lot of money by offering insurance, Detroit residents will be expensive to insure because they are black and behave like blacks. The benefit is that a lot of the overhead of insurance companies can be cut.

However, once again, Detroit is so highly black was not discussed in this article as being related to Detroit having such high auto insurance rates.

Conclusions

Most of the articles I read on this topic were virtual carbon copies of each other, and not one of them brought up the fact that blacks are high risk, not only due to differences in accidents but other items that lead to higher claims (theft, vandalism, drifting, etc..) This is part of a pattern where authors of articles censor themselves from self-explanatory items that are the cause and then present blacks or other minorities as victims of the system that have no responsibility for any outcomes. This was illustrated in the quote on the black man who lived in a neighborhood with continual gunshots, leaving out the perpetrators’ race as if they are just as likely to be Scandinavian as black.

What About Other Insurance Issues that Affect Everyone, Not Just Blacks?

There are so many problems with the insurance industry related to its under-regulation, which impacts everyone across the board. Curiously, the main thing ProPublica and other articles found interesting to investigate was racial disparities which are supposedly 100% due to discrimination. For example, there is no good reason for the insurance industry to exist. Private insurance is highly inefficient and imposes a high overhead which makes the insured cover the uninsured. This is, in fact, a major reason auto insurance rates in Detroit are so high. The reality is that the US federal government could ensure everyone at a meager cost, including health insurance, property insurance, health insurance, and other forms of insurance. This topic, the elimination of the insurance industry, is off-limits as it is taboo. However, racial differences in rates of a highly inefficient industry are within limits.