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The Show Me State becomes the 17th to prohibit price optimization, which relies more on consumer buying habits than risk-based principles, for setting insurance rates. (Photo: Shutterstock)

Missouri Insurance Commissioner John Huff announced on Tuesday that the state’s Department of Insurance has officially warned property and casualty insurance companies against using a controversial pricing method that relies more on consumer buying habits than sound actuarial and risk-based principles.

Called “price optimization” or “elasticity of demand,” the practice gives insurance companies the ability to use a wide variety of non-cost based factors to increase premiums to the highest amount before a consumer would seek to shop around with other carriers.

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