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Updated July 7, 2016
Price optimization is an emerging practice in the insurance industry drawing the attention of state regulators, consumer advocates, insurance agents and consumers. Opponents claim that insurers are mining data on customers to set rates based on factors that are unrelated to risk of loss in order to charge each individual customer the highest price that the market will bear. Proponents believe the pricing model is a statistical technique, within actuarial and regulatory standards, which helps insurers determine competitive rate plans.