Most people assume that staying with the same insurance company for years earns them better rates. In reality, the opposite can be true — and Michigan lawmakers are now trying to do something about it.
A new bill working its way through Lansing is shining a light on a little-known industry practice called price optimization — and what it reveals about how some insurance companies set your rates might surprise you.
What Is Price Optimization?
Price optimization refers to the practice of setting premiums based not on a policyholder’s actual risk of loss, but on that customer’s willingness to pay — in other words, how much the insurer thinks you’ll tolerate before you shop around or leave.
A Senate Fiscal Agency analysis of the bill explained that price optimization means establishing rates based on factors like “considering the likelihood that the insured will engage in activities that result in insurance policy turnover” and “estimating the willingness of the insured to pay a higher premium compared to other insureds.” That includes shopping with other insurers for a lower premium, or complaining to an agent or representative of the insurance company.
In short: the less likely you are to leave, the more they may charge you. Loyal, trusting customers can end up paying the most.
What’s Michigan Doing About It?
State Sen. Jeremy Moss (D-Bloomfield) introduced Senate Bill 1013, which would ban auto and home insurance companies from using price optimization in rate-setting. The bill was the subject of testimony before the Senate Economic and Community Development Committee.
Beyond addressing price optimization, the bill would revise portions of Michigan’s insurance code governing rate standards, reinforcing that rates must not be excessive, inadequate, or unfairly discriminatory.
Michigan’s Department of Insurance and Financial Services (DIFS) already largely bans the practice through a bulletin issued by the agency’s director in March 2024, which states that price optimization is not permitted under Michigan law. The new legislation would lock that protection into statute, so it can’t be quietly reversed by a future administration.
Twenty states have already formalized a prohibition on price optimization. Michigan, if SB 1013 passes, would join them.
What This Means for You Right Now
While the bill is still in committee, the dynamic it describes is real — and it’s been affecting Michigan consumers for years.
Consumer Reports has described price optimization as the “schmo tax” because it tends to take advantage of customers who aren’t able or inclined to shop around. In fact, “loyalty discounts” offered by some insurers may be too small to offset the rate hikes that loyal customers quietly absorb.
The pattern goes something like this: a company raises your rates 15–25% at renewal, then offers you a 10% loyalty discount — so you feel good about “saving” while still paying more than a new customer would for identical coverage. Some studies have shown that remaining loyal to an insurance company can cost you money specifically because of price optimization.
If you’ve been with the same insurance company for three or more years without comparing rates, there’s a reasonable chance you’re overpaying.
Why an Independent Agent Is Your Best Defense
This is exactly where working with an independent agency like Tucker makes a genuine difference.
Captive agents — those who work for a single insurance company — can only offer you that company’s rates. They have no ability to tell you that another carrier would insure your home for 20% less. An independent agent has no loyalty to any one carrier. Their loyalty is to you.
At Tucker, we work with multiple top-rated carriers to shop your coverage every year. Auto, home, or both — we compare options so you’re never stuck quietly paying the “loyal customer premium.” It’s the same relationship and service you’ve always had with us, but with the flexibility to move you to a better rate if one becomes available.
That’s the independent agent advantage — and it’s exactly what SB 1013 is acknowledging Michigan consumers deserve.
The Bottom Line
Michigan’s new legislation is a step in the right direction. But while it works through the Legislature, the most effective protection available to you right now is a comparison. If your rates have crept up over the past few years without a claims history to explain it, it’s worth a conversation.
Give us a call at 734-697-5544, Monday through Friday, 9 AM to 5 PM. Or request a quote online — it costs nothing to compare.
