Auto insurance company that doesn’t use credit scores opens office in Detroit
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Michigan’s fastest-growing auto insurer that doesn’t use credit scores when pricing customers and campaigns against what it considers predatory towing and repair shops has opened its first physical office in Detroit.
New Jersey-based CURE Auto Insurance, which I arrived in Michigan In July 2021, in the wake of the state’s controversial overhaul, is the new tenant of the former UAW-GM Training Center located on Detroit’s eastern riverfront, now known as The Icon. and owned By Bedrock Dan Gilbert.
The not-for-profit insurance company has about 60 employees in the office working in mixed on-office/remote arrangements, and expects to grow to more than 100 within two years. CURE’s entire Michigan workforce previously worked remotely.
After just over two years in Michigan, CURE says it now insures about 75,000 vehicles in the state — 58% of which are owned by Detroit residents. It has done significant marketing on billboards and on television and is a sponsor of the Detroit Pistons.
CURE is one of the few auto insurance companies in the state—and perhaps the only one—that does not use a credit score-like metric known as an “insurance score” when pricing rates. Instead, CURE is based primarily on driving history. This approach is important in Detroit, where many have less than ideal credit.
Detroit Mayor Mike Duggan was among the officials present Wednesday at the ribbon-cutting ceremony for CURE’s new office space at 200 Walker St.
“If you have a credit score below 700, the average auto insurer in the country will charge you double the rate for the exact same person, same car, and same driving record,” CURE CEO Eric Boe told the group.
Broken promises
Bo was an advisor to Duggan in 2015, when the first-term mayor was looking for ways to lower Detroit’s auto insurance rates, the highest in the country. Some of his suggestions, such as introducing cost controls for medical services, were found in the 2019 comprehensive state reform law.
“I made him a promise eight years ago that if he could help the legislature pass a bill to set fee schedules and cap limits, we would expand our business into Michigan,” Bo said. “And that task on our part was to get into this state and not use what the rest of our industry uses, which is credit scores, education, profession and income agents, and give real, meaningful and affordable prices to Michiganders under this new law.
According to a survey of more than 21,000 CURE applicants, the average savings per six-month policy was $736 compared to what drivers paid before. And 40% of CURE customers were not insured before signing up.
CURE is one of many auto insurance companies that first started doing business in Michigan after a 2019 overhaul aimed at lowering the cost of insurance. CURE waited to write its first policy in Michigan until July 2021, which is when the new cost controls on error-free medical services went into effect.
Prior to the reform, an estimated 60% of all Detroit drivers lacked insurance and were driving illegally. It used to be common for Detroiters to pay more than $200 a month for car insurance — and often much more than that.
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Michigan Supreme Court rule last month that the new medical cost controls do not apply to accident victims whose injuries preceded the 2019 repair. Prior to the ruling in Andari v. USAA, the cost controls were widely interpreted by government regulators and insurers as applying to everyone. Judges left controls in place for incidents that have occurred since the reform.
“Andari’s case really hurts the rest of the industry a lot worse than it does us,” Bo told the Free Press. “That is why I will not set foot in the city of Detroit or the state of Michigan until July 1st of ’21 because there may be a Supreme Court ruling like this.”
Bo said the main reason CURE is able to offer drivers affordable rates is because it doesn’t have to pay for pre-fix claims.
He said the average PIP, or Personal Injury Protection, claim for an insured CURE customer in Michigan is less than $8,000. Before cost controls, industry data put the average Michigan PIP claim at around $56,000, according to Poe.
“Do we do things differently than everyone else? We do,” he said. But we also have no heritage claims.”
Point selection
The 2019 Faultless Fix also gave Michigan drivers the first-ever choice in how much Faultless Medical coverage to buy. Previously, all auto insurance policies came with unlimited lifetime medical coverage and home assistance, regardless of whether the driver had health insurance that covered auto accidents.
“Every Medicare recipient in this state has been spending $1,000 for unnecessary double coverage, including my mother, who thinks the auto insurance bill was the best thing I’ve ever done,” Duggan said Wednesday.
Unlimited medical treatment is still available and is the default when the PIP option is not selected. But few CURE customers choose unlimited PIP.
According to CURE, 94% of its customers choose one Newly available coverage options for repair$0 PIP, $250,000 PIP, $500,000 PIP, or for Medicaid recipients only, the $50,000 PIP option. In general, less PIP coverage has a lower price.
However, like most other auto insurance companies, CURE has raised premiums in Michigan in recent months in response to rising vehicle parts and repair costs.
The alleged predatory tow
For Bo, the biggest surprise about the Detroit auto insurance business was a discovery Extortionate pricing scams are widespread By some metro Detroit towing companies and collision repair shops.
These companies take a CURE customer’s vehicle after an accident and refuse to release it until CURE has paid exorbitant towing, storage, and miscellaneous fees, sometimes totaling $5,000 or more for a single vehicle.
The scammers essentially avoid the Detroit Police Department’s “authorized” towing and detention program, under which companies are generally prohibited from charging more than $125 per withdrawal and $15 per day for storage.
Poe said the scammers charge “nearly $300 a day to store a car in some unsafe location in Detroit with no fencing or barbed wire or anything.” He added that fraudsters are making it difficult for CURE to locate and recover vehicles, leading to increased storage fees.
About 30 percent of average CURE claims in Detroit are for towing and storage fees, Bo said.
treatment he has Lawsuits filed Against about 20 companies for alleged fraud. It is also working with Detroit police to educate drivers of the possibility of exorbitant fees if they choose to go with unauthorized towing service providers who show up at accident sites.
“We realize they were unaware that about 70% of all pull-ups in the Detroit city limits were unauthorized by police,” he said.
mutual exchange
Michigan is the third state after New Jersey and Pennsylvania where CURE sells insurance, and it is now the state’s largest market for the insurance company.
CURE is a not-for-profit mutual insurance exchange where a group of people with similar backgrounds pool their premiums and share pooled risks to reduce premiums for everyone. The company was founded in 1990 by Bo’s mother, an insurance actuary, and his stepfather, a former New Jersey insurance commissioner.
Call JC Reindl: 313-378-5460 or jcreindl@freepress.com. Follow him on Twitter @jcreindl.
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