🤖 What Is Price Optimization?
"Price optimization" is an algorithm that predicts how much you'll pay before you switch—then charges you exactly that amount. It's not based on your risk. It's based on your willingness to pay.
Translation: If the algorithm thinks you won't shop around, you pay more than someone with the exact same profile who does shop.
How They Predict What You'll Pay
The algorithm analyzes data points that suggest price sensitivity:
You'll Pay More If:
- • You've been with them for years
- • You auto-renew without reviewing
- • You haven't shopped competitors
- • You pay via auto-debit
- • You own your home
- • You have good credit
You'll Pay Less If:
- • You recently got competing quotes
- • You've switched insurers before
- • You called to cancel or negotiate
- • You're price-shopping signals detected
Same Risk, Different Prices
Two customers with identical risk profiles can pay very different rates:
Customer A: "Loyal" customer
$2,400/yr
Auto-renews, never shops, 5+ years
Customer B: Active shopper
$1,650/yr
Gets quotes annually, switched once
Same driving record. Same car. Same coverage. Customer A pays $750/year more because the algorithm knows they won't leave.
States That Have Banned Price Optimization
As of 2025, these states have banned or restricted price optimization:
Other states are considering similar bans. Check with your state insurance commissioner.
How to Beat the Algorithm
🔄 Shop Every Year
The algorithm flags you as price-sensitive when you get competing quotes. Do it every renewal.
📞 Call and Negotiate
Mention competitor quotes. This signals you're willing to switch and may trigger lower offers.
🚫 Don't Auto-Renew Blindly
Review every renewal. Auto-renewal signals complacency to the algorithm.
🔄 Actually Switch Sometimes
Switching history makes you look like a flight risk. Future insurers will offer better rates.
The Bottom Line
Price optimization isn't based on your risk—it's based on your behavior. Insurers use algorithms to charge you the maximum you'll tolerate. The only defense is to behave like someone who will switch: shop annually, negotiate, and actually change insurers when it makes sense.