Missouri insurance regulator bans ‘price optimization’

Insurance companies in Missouri can’t raise a consumer’s premiums just because they think the person will pay it, says the Missouri Department of Insurance.

The state regulator sent a notice telling insurance companies that “price optimization” – the practice of using data to estimate the chance that a particular consumer will cancel or switch to another insurer if the premium increases – violates state law regulating property and casualty insurance, which includes homeowner and auto policies.

Missouri Insurance Commissioner John Huff said the growing practice violates state law, which holds that insurance rates must be set by insurer’s expected claims, cost of doing business, and the risk profile of the policy holder.

Read more: St. Louis Post-Dispatch

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