In a letter to the Michigan Economic and Community Development Committee, the Consumer Federation of America urged the Michigan Legislature to pass S06441, banning price optimization in insurance. This unfairly discriminatory pricing strategy is when insurers charge customers with the same risk profile different premiums based on assumptions about how high a price a customer will tolerate, and they charge these premiums based on personal data that they collect about customers.

Price optimization is a classic example of unfair discrimination and should not be allowed under Michigan law. With price optimization algorithms, insurers gather information about individual policyholders, that may include demographic data, shopping habits, family structure, financial status, and personal activities, to guess which consumers are likely to accept price increases and which consumers will shop around.

By banning this practice, the Michigan Legislature will lower insurance costs, combat unfair discrimination, and more accurately match rates to risk.