Nevada Becomes Latest State to Address Price Optimization
Nevada’s insurance commissioner recently issued a bulletin relating to price optimization. The bulletin reminds property and casualty insurers that their underwriting and rating models must be filed with the division of insurance for approval. This includes models based on credit information or models using a mathematical algorithm. It also specifically includes “any ‘price optimization’ models that an insurer might use to determine the extent to which a selected relativity moves toward the indicated relativity. Such models may not utilize any non-risk-based attributes such as price elasticity of demand or consumer tendency to complain or shop for insurance. All risk-based attributes that such models use must be fully disclosed to the Division along with the specific quantitative treatments of each of those attributes.”
