The Ohio Department of Insurance (“ODI”) has banned the use of price optimization by insurance companies.
In Bulletin 2015-01, the ODI said that it had received inquiries about the use of price optimization, which it said referred to “an insurer's practice of varying premiums based upon factors that are unrelated to risk of loss in order to charge each insured the highest price that the market will bear.”
The ODI pointed out that Ohio insurance law prohibited charging “unfairly discriminatory rates,” requires that rates “be based upon risks,” and requires “differences among risks to have a demonstrable probable effect on losses or expenses.”
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