HARTFORD, Conn. (AP) — Connecticut’s insurance commissioner is warning insurance companies against using a pricing method that relies more on customer buying habits than actuarial or risk-based principals.
A Department of Insurance bulletin requires property casualty carriers that use the methodology, known as price optimization, to stop the practice and resubmit their filings with the agency within 60 days.
Companies that fail to do so could face disciplinary action.
The price optimization methodology allows insurance companies to use a wide variety of non-cost based factors as a basis for increasing premiums.
Insurance Commissioner Katharine Wade says her agency views price optimization as a discriminatory practice and a violation of state insurance law.
She says it can result in two policyholders with the same loss history and risk profile receiving two different premium increases.
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