Connecticut Insurance Commissioner Katharine L. Wade announced last week that the state's Insurance Department has officially warned property and casualty insurance companies against using a controversial pricing method that relies more on consumer buying habits than sound actuarial and risk-based principles.

Called "price optimization" or "elasticity of demand," the practice gives insurance companies the ability to use a wide variety of non-cost based factors to increase premiums to the highest amount before a consumer would seek to shop around with other carriers.

"The department views price optimization as a discriminatory practice and therefore a violation of state insurance law. It can result in two policyholders who have the same loss history and risk profile receiving two different premium increases," Wade said.

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