Michigan Warns Car Insurers: Price Fairly or Face Penalties

State law bars data-driven advantageous markups, department of insurance says.

Chris Schafer
Written byChris Schafer
Chris Schafer
Chris SchaferSenior Editor
  • 15+ years in content creation

  • 7+ years in business and financial services content

Chris is a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more.

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John Leach
Edited byJohn Leach
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John LeachSenior Insurance Copy Editor
  • Licensed property and casualty insurance agent

  • 8+ years editing experience

John leads Insurify’s copy desk, helping ensure the accuracy and readability of Insurify’s content. He’s a licensed agent specializing in home and car insurance topics.

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Published April 3, 2024 at 5:00 AM PDT | Reading time: 2 minutes

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Engage in price optimization and face fines and other penalties. That’s the message from the Michigan Department of Insurance and Financial Services to insurers statewide. 

“When we see a failure to abide by the Insurance Code, we refer those cases for investigation and possible enforcement action,” Laura Hall, director of the Office of Communications at the Michigan Department of Insurance and Financial Services, told Insurify.

The bulletin sent by department Director Anita G. Fox reminds insurers that price optimization is prohibited under Michigan state law.

Price optimization is the practice of using data to estimate the highest price a policyholder will pay before they look for coverage elsewhere.

Michigan protects the affordability of property and casualty rates through the Michigan Insurance Code which states: “rates for property and casualty insurance shall not be excessive, inadequate, or unfairly discriminatory.”

The state judges rates to be discriminatory if the price difference, for identical coverage, cannot be justified by expenses, losses or both.

Keeping high rates in check

The notice from Director Fox informs Michigan insurers that “The Director closely reviews all rate filings to ensure that price optimization is not occurring. Companies 

making rate filings must also attest that they do not utilize price optimization. DIFS will take appropriate administrative action against any companies employing price optimization in any form.”

That’s good news for Michigan residents as they already pay some of the highest car insurance rates in the nation, averaging $349 per month for full coverage and $185 for liability protection according to Insurify data.

The national average for full coverage insurance is $213 and $104 for liability insurance.

Home insurance rates in the state are near national averages, but Michigan’s no-fault car insurance system elevates its car insurance premiums.

What’s next? Working with insurers to benefit consumers

“The Department issued the bulletin as part of its ongoing efforts to remind consumers and industry about important insurance topics,” Laura Hall, director of the Office of Communications at the Michigan Department of Insurance and Financial Services, told Insurify. “Past examples of those efforts include notices about cancer health coverage, reproductive rights, LGBTQ+ protections, and more.”

If state regulators catch an insurer practicing price optimization, it could face penalties, Hall added.

However, she added, the goal is always to work with insurers, even those who aren’t following state guidelines. “Through these cases, we work to bring companies into compliance, ensure the consumer is made whole, and levy fines and other penalties to deter future bad conduct.”


Chris Schafer
Chris SchaferSenior Editor

Chris is Insurify’s Senior Editor for home insurance. He’s a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more. He is passionate about breaking down complex subject material to make important information accessible to everyone. 

Chris began his career as a journalist, managing two weekly newspapers, then moving into marketing and content marketing roles. Before joining Insurify, Chris served as the content strategy manager at Siteimprove and as the content manager at Brandpoint, where he managed a team of content creators. 

Away from work, Chris is an active hockey player and proud father of two rambunctious little girls. Chris holds a Bachelor’s degree in English with a minor in mass communications from the University of Minnesota. 

John Leach
Edited byJohn LeachSenior Insurance Copy Editor
Photo of an Insurify author
John LeachSenior Insurance Copy Editor
  • Licensed property and casualty insurance agent

  • 8+ years editing experience

John leads Insurify’s copy desk, helping ensure the accuracy and readability of Insurify’s content. He’s a licensed agent specializing in home and car insurance topics.

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