Auto-insurance companies have long used factors other than a customer's driving record to underwrite and price risks. Today, though, the Consumer Federation of America (CFA) has called on all state-insurance commissioners to crack down on insurers that raise rates on customers who are more likely to stick with the same company.

“It has never been more important to shop around for auto insurance, no matter how long you have been with your current company,” says Robert Hunter, CFA's director of insurance, in a statement. “Even if you have a perfect driving record, many insurance companies are raising rates on people just like you—people who do not shop around.”

Through a method called “price optimization,” insurers quantify (among other things) your likelihood of sticking with the company and then adjust rates based on their analysis. Hunter calls the practice unfair and dishonest.

Last September, he similarly called for an end to price optimization after the insurance industry consulting firm, Earnix, released a report that said a large amount of companies were adopting price-optimization models in ways similar to how they adopted credit-based insurance models.

The best way for consumers to protect themselves, according to Hunter, is to shop around and compare rates.

David Snyder, vice president of international policy at Property Casualty Insurers Association of America (PCI), tells PC360 price optimization is not as simple as CFA says. “The auto-insurance market is highly competitive and we certainly support well informed consumers who shop from time to time,” he says “But price optimization is more nuanced and complicated than the CFA indicates. We would take issue with the one-dimensional picture that the CFA painted.”

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