Not that insurance companies would raise someone’s rates just because they could, but if they did that, or at least if they did it in Pennsylvania, Insurance Commissioner Teresa Miller would tell them to think again.
In a sternly worded press release, Miller made it clear that “price optimization” is illegal in Pennsylvania. Her press secretary said he does not know of any current or past examples of the practice in Pennsylvania. “It isn’t allowed. It has never been allowed and the commissioner just wants to make it very clear that if any insurance company is thinking about such a practice, it won’t be allowed,” said Ron Ruman.
Ruman said that with the increasing sophistication of software programs, practices like price optimization become a real concern.
Asked what price optimization might look like in real terms, he said that an insurance company which had had a client for a long period of time might believe that client had become less price sensitive over time and probably would not shop around even if their rates went up. That insurance company, seeking to get the best price it could for its product, might raise the rates on this client while offering the exact product to a new client at a lower cost.
“If we ever see such a thing in a rate filing, it won’t be allowed,” he said.
Pennsylvania Governor Tom Wolf was on board with the warning. “My administration is working with Commissioner Miller to ensure that Pennsylvania consumers are protected from unlawful schemes like price optimization,” he said.
Ruman, while declining to say price optimization has happened in Pennsylvania or elsewhere, said “we have heard there have been discussions.”
Consider it nipped in the bud.
