TEC Insurance Home Page
Alternate Content

Auto Home & Farm Business Get A Quote Life & Health

Have your auto or homeowner insurance rates been creeping up? If so, you may have been “POed” by your auto insurer. According to new information from the Consumer Federation of America, some insurance companies are secretly “price optimizing” customers; charging them a higher rate for no other reason than they think the customer won’t shop around for a better deal.

“Price optimization is a data mining tool used by insurers to charge higher premiums to those consumers least likely to shop for a new policy in the face of a rate increase,” says CFA.

How do they know whether you are likely to shop around? For now at least, that information isn’t public. “I don’t know what’s in the black box,” says Bob Hunter, CFA’s Director of Insurance. But he notes that insurance companies typically can review credit report data, information provided on applications, and a host of other data available from third-party sources about current and prospective customers.

As an actuary, Hunter says he first heard of this practice when he participated in an industry webinar touting the benefits to insurers of pricing policies this way. He subsequently reviewed industry information that indicated this is not an isolated practice among just a few insurers. When insurers do use a price optimization tool, “if you are in a group that shops less, you are going to pay more,” he says.

CFA and other consumer groups are asking regulators to stop insurance companies from using price optimization techniques when setting rates and premiums.

Julia Angwin, whose book Dragnet Nation: A Quest for Privacy, Security, and Freedom in a World of Relentless Surveillance, revealed the myriad ways companies track consumer information and use it to increase profits, sees this as one example of the way our own information can be used to get us to pay more. “People are worried about the NSA but all the ingredients are there for…charging the prices consumers can bear,” she says.

What Does This Mean for You?

Contact us for a quote today. We guarantee you great insurance at the right price.

Read More: Source

Posted 8:17 AM  View Comments

Share |


No Comments


Post a Comment
Name
Required
E-Mail
Required (Not Displayed)
Comment
Required


All comments are moderated and stripped of HTML.
Submission Validation
Required
CAPTCHA
Change the CAPTCHA codeSpeak the CAPTCHA code
 
Enter the Validation Code from above.
NOTICE: This blog and website are made available by the publisher for educational and informational purposes only. It is not be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state. By using this blog site you understand that there is no broker client relationship between you and the blog and website publisher.
Blog Archive


View Mobile Version
Footer
Facebook Twitter