Price optimization illegal?
If price optimization uses factors like propensity to shop around for pricing, the price can be different for individuals/small classes with similar risk factors. It appears to be a kind of price discrimination. While Clayton antirust prohibits price discriminations not based on the reduced cost of insurance (Robinson Patman Act), does price optimization violate Clayton Antitrust?
Comments
Whether insurance price optimization violates the Clayton Antitrust Law would depend on factors such as:
Market Power: If insurers with significant market power use price optimization to unfairly exclude competitors or maintain dominance in the market, it could raise antitrust concerns.
Collusion: If insurers engage in collusion or concerted action to collectively implement price optimization strategies in a way that harms competition, it could violate antitrust laws.
Discrimination: If price optimization results in unfair discrimination against certain groups of policyholders, such as low-income or minority individuals, it could raise legal and ethical concerns.
Impact on Consumers: If price optimization leads to higher prices for consumers without corresponding benefits or if it limits consumer choice, it could attract antitrust scrutiny.