- Price Optimization Is Unfairly Discriminatory, Florida Office of Insurance Regulation Cautions Florida Property and Casualty Insurers
- May 25, 2015
- Law Firm: Colodny Fass P.A. - Fort Lauderdale Office
Insurers' use of price optimization to determine premiums can result in rates that are unfairly discriminatory--a violation of Sections 627.062 and 627.0651--Florida Insurance Commissioner Kevin McCarty explained to authorized Florida property and casualty insurers in Informational Memorandum OIR-15-04M issued today, May 14, 2015.
Insurers that have used price optimization in the determination of filed rates currently in effect should submit a filing to eliminate that use, Commissioner McCarty cautioned. Further, insurers should ensure that any filings subsequent to today's Memorandum do not utilize price optimization in any manner.
Although the Florida Office of Insurance Regulation ("OIR") acknowledges that "price optimization" does not have a universally recognized definition, it nevertheless defines the term within today's Memorandum as " . . . a process for modifying the insurance premium that would otherwise be charged to an insured or class of insureds in order to maximize insurer retention, profitability, written premium, market share, or any combination of these while remaining within real world constraints."
The complete Memorandum is attached for review.
NAIC Task Force to Invite Comments on Price Optimization White Paper Draft
Today's OIR guidance came in advance of a May 19 National Association of Insurance Commissioners ("NAIC") Casualty Actuarial and Statistical Task Force meeting that will review a draft Price Optimization White Paper and invite public comments for a subsequent 45-day period.
To view the NAIC's Price Optimization White Paper draft and comments submitted on it, click on the hyperlinks below:
- Price Optimization White Paper Draft - 3/24/15
- Regulator Comments, Dec. 2014
- Academy Presentation, Nov. 2014
- CAS Presentation, Nov. 2014
- CAS Paper, Nov. 2014
- CFA Comments, Nov. 2014
- Maryland Bulletin, Oct. 2014
- Ohio Bulletin, Jan. 2015
- California Bulletin, Feb. 2015
- Schwartz (NC) Presentation 2009
- Auto Insurance (C/D) Study Group Referral
- Referral Attachments