On November 16, 2015, Minnesota Commerce Commissioner Mike Rothman issued Administrative Bulletin No. 2015-3, which ordered Property & Casualty Insurers doing business in the State of Minnesota to cease using “price optimization” in conjunction with the personal lines policies in the State of Minnesota.

The Commissioner’s concerns arise out of property & casualty insurers’ use of non-insurance consumer data, which Commissioner Rothman described as nothing more than “high-tech price gouging.”

Pointing to the rate making requirements under Minnesota Statutes Chapter 70A, Commissioner Rothman stated that “price optimization” “violates the state law because it unfairly discriminates by charging different premiums for consumers who otherwise have similar risk profiles.” He went on to state that insurance companies “that use price optimization are secretly and unfairly penalizing customers for their loyalty by charging them higher premiums.”

Due to the fact that the “price optimization” is becoming more widespread in the industry, Commissioner Rothman issued the Administrative Bulletin to all Property & Casualty Insurers doing business in the State of Minnesota. He further advised the property & casualty industry that the Department had recently rejected a rate filing by an auto insurer that included price optimization techniques, and strongly signaled that any filings by any other property & casualty insurer will meet the same fate.

To the extent any other property & casualty insurer has been using price optimization in the State of Minnesota, Commissioner Rothman ordered that they immediately cease the practice and submit revised filings within sixty (60) days from the date of the Bulletin to remove this rating practice, and submit a corrective action plan.

Lastly, Commissioner Rothman is requiring that, for all future property & casualty rate filings in the State of Minnesota, a company officer or actuary of the company will be required to swear under oath that “price optimization” is not being used.