Property and casualty insurers in California have been notified by insurance commissioner Dave Jones that “price optimization” in setting rates is discriminatory and violates state law.

According to the commissioner, the practice in essence bases what a group of individuals will pay for insurance on their “willingness to pay a higher premium relative to other individuals or classes.” Customers less likely to compare prices for policies in a particular area may find themselves paying more for the same coverage offered at a lower price in a different jurisdiction because those residents are savvier when it comes to shopping for rates.

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