Prof. Daniel Schwarcz Interviewed in The Markup in an Investigative Report on Michigan Car Insurance Loopholes

Professor Daniel Schwarcz, Fredrikson & Byron Professor of Law and Distinguished University Teaching Professor, was quoted in The Markup about auto insurance companies in Michigan are using loopholes to upcharge certain customers on attributes not directly based on how well they drive. In 2019, Michigan lawmakers banned car insurance companies from using certain “non-driving” characteristics, like zip codes or credit scores, to calculate the price of their customers’ coverage. Despite the new laws, marginalized communities continue to pay higher rates. Investigations have shown insurance companies are charging Michigan’s most expensive car insurance rates in neighborhoods with the most Black residents, especially in and around Detroit. To counteract the stark racial differences in their pricing systems, insurance companies should explicitly account for race by using statistical methods, according to a growing number of critics. Prof. Schwarcz has studied how to rectify discrimination in insurance markets. He said, “That [discrimination] you’re finding in Michigan exists everywhere. And that’s the inevitable result of the system we have.”