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Connecticut Issues Bulletin Banning Price Optimization

In a recent bulletin, Connecticut became the 16th jurisdiction to ban price optimization in insurance pricing. Connecticut Insurance Commissioner Katherine L. Wade stated that the Department “views price optimization as a discriminatory practice and therefore a violation of state insurance law.” Wade specifically cited factors such as a customer’s “propensity to shop for insurance or...

Minnesota the Latest State to Join the Price Optimization Bandwagon

The Minnesota Department of Commerce has issued Administrative Bulletin 2015-3, barring the use of price optimization in ratemaking by property and casualty insurers. The Bulletin states that “[p]rice optimization is not an actuarial estimate based on expected losses, expenses, and the degree of risk,” and it therefore concludes that the use of price optimization is unfairly...

Disagreement in the Insurance Industry over Price Optimization

The insurance industry has seen a growing debate over price optimization, including the formation of a National Association of Insurance Commissioners (NAIC) task force designed to investigate such practices. Many industries use price optimization to set prices depending on what a consumer would pay for a good or service, but the accepted practice in the insurance industry—with the...

Rhode Island Department of Insurance Issues Bulletin Prohibiting Price Optimization

Rhode Island Superintendent of Insurance Joseph Torti III recently issued a bulletin advising Rhode Island personal line insurers that Rhode Island law prohibits the use of certain price optimization techniques in determining property/casualty rates. Under Rhode Island law, applicants for insurance with identical risk classification profiles must be charged the same premium. Any...

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