Michigan Senator Introduces Bill to Ban Insurance Price Optimization
State Sen. Jeremy Moss introduced legislation to ban insurance companies from using price optimization practices that charge loyal customers higher rates based on their shopping patterns.
LANSING, MICHIGAN — State Sen. Jeremy Moss (D-Bloomfield) introduced legislation this week to prohibit auto and home insurance companies from using price optimization practices that he described as predatory targeting of loyal customers.
Senate Bill 1013 received testimony Wednesday before the Senate Economic and Community Development Committee. The proposed legislation would make Michigan the 21st state to outlaw the practice.
How Price Optimization Works
“Did you know that your rates may be even higher just because you’re a loyal customer to your insurance company?” Moss asked committee members during his testimony.
According to Moss, price optimization allows insurance companies to analyze customer shopping patterns and determine the highest rates consumers are willing to pay. “If they think you’ll renew your policy, they may hide rewards, discounts, perks and special offers from you — or worse, simply jack up your rates,” he said in a news release following the hearing.
A Senate Fiscal Agency analysis of the bill explained that price optimization involves establishing rates based on factors unrelated to a consumer’s actual risk of loss. This includes considering whether customers are likely to shop with other insurers, cancel policies early, or complain to agents about their coverage.
Current Practice in Other States
Twenty other states have already banned price optimization practices by insurance companies. The proposed Michigan legislation would join existing prohibitions across the country targeting what consumer advocates consider unfair pricing strategies.
The bill specifically targets practices where insurers estimate customers’ willingness to pay higher premiums compared to other policyholders, regardless of their actual risk profile or claims history.
Legislative Process
The Senate Economic and Community Development Committee heard testimony on the proposal Wednesday as part of the legislative review process. The bill would need approval from both chambers of the Michigan Legislature before reaching the governor’s desk.
Moss characterized the practice as a “shady” method that exploits consumer loyalty and shopping behavior to maximize insurance company profits at the expense of long-term customers.
The legislation comes as Michigan continues to grapple with high auto insurance costs that have historically ranked among the nation’s highest. The proposed ban would apply to both auto and homeowners insurance policies sold in the state.
