Auto Insurance

Letter to NAIC Prohibiting the Use of “Price Optimization” in Insurance Pricing as Clear Violation of Unfair Discrimination Provisions in State Rating Laws

The Consumer Federation of America (CFA) and the Center for Economic Justice (CEJ) write to urge state insurance regulators, individually and as members of the NAIC, to stop the use of “price optimization” by insurers to set premium charges for consumers. In this letter, we explain what “price optimization” is, why it clearly violates statutory and actuarial standards barring unfairly discriminatory rates, and why it will lead to higher rates for the most vulnerable consumers for reasons completely unrelated to risk of loss.