Michigan bill to ban auto insurance price optimization

A Michigan bill would ban price optimization in auto and home insurance rate setting. 

SB 1013 was introduced by Sen. Jeremy Moss (D-Bloomfield) last week.

“Price optimization is a shady practice that allows insurance companies to exploit your shopping patterns to determine the highest rates you are willing to pay,” Moss said in a press release. “If they think you’ll renew your policy, they may hide rewards, discounts, perks, and special offers from you — or worse, simply jack up your rates.”

Moss says that 20 other states have outlook price optimization and that Michigan’s insurance department already prohibits the practice. The bill would put the prohibition into law, he adds. 

The release describes price optimization as an insurance company setting rates based on what it believes a consumer will “tolerate” paying. It adds that oftentimes, customers who threaten to cancel their policy are offered discounts. 

The bill would also strengthen some language in the state’s insurance code, such as changing “shall” to “must.” 

It states that a rate must not be excessive, inadequate, or unfairly discriminatory, and that a rate cannot be inadequate unless it is unreasonably low for the insurance coverage provided and continuing coverage at that rate would endanger insurer solvency. 

The bill has moved to the Economic and Community Development Committee.

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