Have you ever heard of “Price Optimization“? It sounds harmless enough, but when these words are used by the insurance industry, they take on a whole new twisted meaning.
UPDATE: Price Optimization has been declared ILLEGAL. If this happens to you, contact your state’s Department of Insurance immediately.
Gouging the Most Loyal Customers
Price Optimization is code for when an insurance company charges its most
loyal customers the highest prices. When your policy is up for renewal, your insurer bets that you will be complacent and simply renew your coverage with them, without bothering to compare rates with other companies. So they increase your rates. Significantly. This way, your insurer quickly achieves higher profits and the company’s stock value rises, making their shareholders very happy.
It Happened to Me
I first heard of Price Optimization right after I purchased a new car and saw my insurance rates rocket an incredible thirty-five percent. I asked my insurer’s representative why and received absolutely no (rational) explanation. I have a completely clean driving record and I purchased the same exact car, only three years newer. So why was my insurance company of almost seven years punishing me? And why didn’t this happen when I changed cars before?
Price Optimization is Used by the Insurance Industry Only Periodically
What baffled me the most about the sudden increase to my premiums was that I had made the exact same vehicle switch three years previously, and my rates didn’t increase. In fact, they DECREASED.
My premium didn’t increase in the past because insurance companies don’t always use Price Optimization. The practice is used only periodically, depending on the current financial status of the company. They like to keep us guessing.
Take Action and Protect Your Wallet
If you see an inexplicable increase in your insurance rates, call another company for a quote immediately. Don’t let them rip you off.