A One-Stop Insurance Law Firm
I have been asked to provide a roundup of the state developments with respect to “price optimization”. Some states acknowledge that “price optimization” does not have a universally recognized definition. There is a continually growing number of states that have stated that to the extent “price optimization” involves rating that considers non-risk-related factors such as “price elasticity of demand” (in insurance rating, taking…
Ohio is now prohibiting price optimization in the calculation of insurance premiums. Ohio recently became the second state, after Maryland, to explicitly prohibit the use of “price optimization” in the rating of property and casualty insurance policies. Price Optimization Used to Increase Premiums Price optimization considers certain factors–such as the amount or percentage of past premium increases without the insured switching insurers, or…
As I have been investigating price optimization (PO), I learned that there are two primary concerns: The first concern is whether the application of PO is a move away from risk based rating. The second concern is whether PO results in rates that are unfairly discriminatory, particularly to low income consumers. In other words, would two identical risks get different…