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D.C. Bans Price Optimization

Sept. 1, 2015 AAIS Advisory notice

The District of Columbia has joined the growing list of jurisdictions that have banned the use of price optimization in insurance rate filings.

In a recent bulletin, the district's insurance department characterizes price optimization as "an insurer's practice of charging the maximum premium that it expects an individual or class of individuals to bear . . "

As a result, according to the bulletin, price optimization create "the potential for policyholders with like risk characteristics to receive different premiums" which constitutes unfair discrimination.

The bulletin announces a ban on the use of price optimization in all future rate filings. Insurers currently using price optimization to rate policies in the district must submit compliant filings by Nov. 30, 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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