# WA OIC Technical Assistance Advisory 2015-01: Price Optimization, July 9, 2015 > Washington · Agency guidance · In force URL: https://www.frixlaw.com/law-library/statutes/WA_OIC_TAA_2015_01 ## Section - **Citation:** WA OIC Technical Assistance Advisory 2015-01 - **Heading:** Price Optimization, July 9, 2015 - **Jurisdiction:** Washington - **Kind:** Agency guidance - **Status:** In force - **Text as of:** August 14, 2026 - **Source:** Compiled text - **Location:** Washington OIC Technical Assistance Advisories and Emergency Orders / Price Optimization, July 9, 2015 ## Text STATE OF WASHINGTON MIKE KREIDLER OLYMPIA OFFICE: STATE INSURANCE COMMISSIONER INSURANCE BUILDING P.O. BOX 40258 OLYMPIA, WA 98504-0258 Phone: (360) 725-7000 OFFICE OF INSURANCE COMMISSIONER Technical Assistance Advisory 2015-011 TO: Property and Casualty Insurers Doing Business in Washington State FROM: Insurance Commissioner Mike Kreidler DATE: July 9, 2015 SUBJECT: Price Optimization In general, the practice of price optimization involves an insurer’s use of sophisticated statistical analysis, often using non-insurance data, to predict a policyholder’s likelihood of renewing a policy. One example is using statistical analysis of consumer behavior to determine the premium a policyholder would be willing to pay at renewal before he or she engages in comparison shopping. This practice can result in two policyholders receiving different premium increases, even though they have the same loss history and risk profile. It can also result in increased costs for policyholders who keep their business with the same insurer—in other words, a loyalty penalty. Washington State law requires that premium rates for insurance not be excessive, inadequate, or unfairly discriminatory.2 A rate is not unfairly discriminatory if it is an actuarially sound estimate of the expected value of all future costs associated with an individual risk transfer.3 Thus rates must be based on cost associated with risk. Charging higher rates to certain consumers based on their willingness to look elsewhere for insurance does not reflect a genuine increased cost incurred by the insurer. To the extent that an insurer’s use of price optimization results in premiums, rates, or rating factors unrelated to cost and risk, it will be considered unfairly discriminatory and in violation of Washington State law. The OIC will not approve unfairly discriminatory rates n their willingness to look elsewhere for insurance does not reflect a genuine increased cost incurred by the insurer. To the extent that an insurer’s use of price optimization results in premiums, rates, or rating factors unrelated to cost and risk, it will be considered unfairly discriminatory and in violation of Washington State law. The OIC will not approve unfairly discriminatory rates. Please direct any questions about this advisory to Lee Barclay, Senior Actuary, at leeb@oic.wa.gov, or at 360- 725-7115. 1 This advisory is an interpretive policy statement released to advise the public of the OIC’s current opinions, approaches, and likely courses of action. It is advisory only. RCW 34.05.230(1). 2 RCW 48.19.020 3 WAC 284-24-065(1) ## Nearby sections - [WA OIC Advisory Notice (2020) Advisory notice regarding COVID-19 claims](https://www.frixlaw.com/law-library/statutes/WA_OIC_ADV_PROPERTY_CASUALTY_ADVISORY_NOTICE_COVID_19.md) - [WA OIC Emergency Order (2026) Providing relief to Washington consumers from 2026 wildfires by addressing grace periods for nonpayment of premium and temporarily prohibiting cancellation and nonrenewal of property and automobile policies](https://www.frixlaw.com/law-library/statutes/WA_OIC_EO_WSR_26_16_059.md) - [WA OIC Emergency Order No. 25-01 Providing relief to Washington consumers from December 2025 atmospheric river and winter weather event](https://www.frixlaw.com/law-library/statutes/WA_OIC_EO_25_01.md) - [WA OIC Emergency Order No. 26-02 Ordering one-time refill of prescription medications prior to waiting periods, providing a minimum 60-day grace period for payment of premiums, prohibiting cancellations](https://www.frixlaw.com/law-library/statutes/WA_OIC_EO_26_02.md) - [WA OIC Memorandum (2024-08-30) Aug. 30, 2024, memorandum regarding Aetna and Providence contract negotiations](https://www.frixlaw.com/law-library/statutes/WA_OIC_MEMO_AETNA_PROVIDENCE_BRIEFING_MEMO_AUG_2024.md) - [WA OIC Technical Assistance Advisory 2015-01 Price Optimization, July 9, 2015](https://www.frixlaw.com/law-library/statutes/WA_OIC_TAA_2015_01.md) - [WA OIC Technical Assistance Advisory 2016-01 Student Health Plans, March 28, 2016](https://www.frixlaw.com/law-library/statutes/WA_OIC_TAA_2016_01.md) - [WA OIC Technical Assistance Advisory 2017-01 Two-day Notification Requirement for Security Breaches](https://www.frixlaw.com/law-library/statutes/WA_OIC_TAA_2017_01.md) - [WA OIC Technical Assistance Advisory 2017-01a Two-day Notification Requirement for Security Breaches](https://www.frixlaw.com/law-library/statutes/WA_OIC_TAA_2017_01a.md) - [WA OIC Technical Assistance Advisory 2018-01 Implementation credits as illegal inducement or rebate](https://www.frixlaw.com/law-library/statutes/WA_OIC_TAA_2018_01.md) - [WA OIC Technical Assistance Advisory 2021-01 Unlicensed Producer Activity](https://www.frixlaw.com/law-library/statutes/WA_OIC_TAA_2021_01.md) - [WA OIC Technical Assistance Advisory 2021-02 Commissioner's Universal Life Reserve Valuation Method](https://www.frixlaw.com/law-library/statutes/WA_OIC_TAA_2021_02.md) - [WA OIC Technical Assistance Advisory 2021-03 Submission of Higher Education Student Health Insurance Plans](https://www.frixlaw.com/law-library/statutes/WA_OIC_TAA_2021_03.md) - [WA OIC Technical Assistance Advisory 2021-04 Access to Inpatient Substance Use Disorder Treatment Under RCW 48.43.761](https://www.frixlaw.com/law-library/statutes/WA_OIC_TAA_2021_04.md) --- Source: Frix Law Library, https://www.frixlaw.com/law-library/statutes/WA_OIC_TAA_2015_01. Check the current official text before relying on it. Not legal advice.