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Indiana Prohibits Use of Price Optimization

July 20, 2015 AAIS Advisory notice

Indiana has joined several states that have taken steps in recent months to prohibit the use of price optimization in property/casualty insurance ratemaking.

Citing "growing concern . . . that insurers are shifting from cost-based ratemaking and increasingly introducing price sensitivity into their rating methodologies," a bulletin from the Indiana Department of Insurance states that "the use of price optimization in establishing rates is not permitted."

Companies using price optimization to rate policies sold in Indiana are instructed to submit new rate filings within 90 days of the bulletin, which was issued on July 20, 2015.

AAIS Advisory notices are posted periodically to announce AAIS product developments, and to provide news items that are relevant to our program users. Advisory notices are news summaries that paraphrase documents which should be consulted directly for complete, authoritative information. 

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