State warns insurers to charge fair prices for auto, home policies

Written by Ben Allen, General Assignment Reporter | Sep 21, 2015 5:54 AM

(Harrisburg) -- The state is putting insurers on notice.

Using complicated formulas, insurance companies have tried to predict whether a customer will shop around, or jump to another insurer, if their premium costs for auto or home insurance go up.

It's known as price optimization, and in Pennsylvania, it's illegal.

The state Insurance Department recently reminded insurers about the law, and is still checking policies before approval.

People who have been with an insurer for years can sometimes find their rates are climbing, even as their risk remains the same.

State Insurance Commissioner Theresa Miller says her staff has found some policies with the illegal language.

"So we have pushed back on filings that we've received where we saw evidence of price optimization and we just didn't allow those filings to go through. We disapproved them," she says.

Miller says it reviews every company's policies, but some can be very complicated.

She's confident her staff has stopped most policies, but can't guarantee its caught all.

"It's possible. I hope it hasn't happened, but it's certainly possible because it's not easy to detect," she adds.

Miller says if your auto or home insurance premiums are increasing, you should ask your agent why, and also consider filing a complaint with the state.

She says it's also important to shop around - there are more than 200 companies offering auto insurance in Pennsylvania alone.

Insurers are still free to vary premium costs on factors related to risk.

The insurance industry's trade group has defended price optimization in the past, saying its part of making a profit.

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