Describe how regulators are responding to newer rating practices such as price optimization and predictive models.
Free CAS Exam 6-U.S. (Regulation and Financial Reporting) lesson in United States Laws and Regulations. 10 min read, ~1,479 words.
Price optimization sets premium using non-cost factors, mainly price elasticity of demand and retention, rather than expected loss and expense. Regulators treat pure price optimization as unfairly discriminatory because identical-risk insureds pay different premiums for reasons unrelated to cost. State bulletins led the response: Maryland acted first in October 2014...
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Learning objectives
- A5
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