Michigan Governor Gretchen Whitmer signed legislation banning price optimization in insurance, a practice in which companies charge different premiums to customers based on their willingness to pay rather than risk factors. Senate Bill 1013 codifies guidance the state Department of Insurance and Financial Services issued in March 2024.
Under price optimization, insurers can vary premiums based on how much a customer appears willing to spend, rather than basing rates solely on factors related to the risk of loss or expense — such as driving record, home characteristics, or claims history. The practice can result in similar customers paying vastly different rates for the same coverage.
"This new law codifies the consumer protections outlined in DIFS' 2024 bulletin and bans insurers from unfairly increasing premiums based on what customers are willing to pay," DIFS Director Anita Fox said. "These safeguards help ensure that every Michigander can trust that their insurance rates are based on factors related to the risk of loss or expense."
The department reviews automobile, homeowners, and other property and casualty insurance rate filings to ensure price optimization is not occurring. DIFS said it will take regulatory action against any insurer found to employ the practice in any form. Consumers who believe they have been subjected to price optimization can file a complaint with DIFS at 877-999-6442 or online at Michigan.gov/DIFScomplaints.