I hear this question at least once a week. Someone pulls into my virtual office – frustrated, confused – holding a renewal notice that’s roughly 1about 5% higher than last year. No tickets, no claims, no new driver in the family. Just a number that went up for what feels like no reason.
There is a reason. You’re just not going to like it.
Insurance companies have been using algorithms to price policies for decades. But in the last few years, those algorithms got a lot smarter – and a lot more invasive. They’re not just looking at your driving record anymore. They’re looking at your credit score, your shopping habits, your zip code, even the type of car you drive and how many late payments you’ve made on your utilities. They’re using machine learning models that can find correlations you wouldn’t believe.
Someone I worked with – let’s call her Angela – was a perfect driver. Fifteen years, no accidents, no tickets. She drove a sensible sedan. Her credit score was around 760. She lived in a decent neighborhood. Her auto insurance premium went up about 22% in one year. She called her carrier. They gave her the standard answer: “We’ve adjusted our rates based on market conditions.”
She asked for a breakdown. They refused. She came to me.
I ran her information through a few quoting tools. Her zip code had seen an increase in theft claims – not her car, but others. Her credit card utilization had gone up because she bought a new refrigerator – not a late payment, just higher balance. And her insurer had started using a new AI model that penalized anyone who didn’t have a history of bundling home and auto. Angela rents. She couldn’t bundle.
None of those factors have anything to do with how she drives. But they affected her premium.
That’s the new world of insurance underwriting. It’s not about risk anymore – or rather, it’s about proxy risk. The algorithm doesn’t know if you’ll have an accident. But it knows that people with your credit profile, in your zip code, driving your car, have a slightly higher claim frequency. So you pay more.
The NAIC – National Association of Insurance Commissioners – passed a model law on AI transparency in late 2025, give or take. Illinois hasn’t adopted it yet, but the conversation is happening. The law would require insurers to disclose the key factors that affected your premium. Not the full algorithm – trade secrets – but enough for you to understand what you could change to lower your rate.
Until that law takes effect, you have to do your own detective work.
Here’s the first thing to check. Get your credit-based insurance score. Not your regular credit score – insurance companies use a modified version that weighs payment history and credit utilization differently. You can request it from the same bureaus (Experian, TransUnion, Equifax) for a small fee. If your score is low, work on improving it: pay bills on time, keep credit card balances low, avoid opening multiple new accounts.
I remember a guy named Kevin. His insurance score was 80 points lower than his regular credit score because he had a high balance on one card – even though he always paid on time. He paid down that card from around $7,000 to $1,000. His insurance score jumped 50 points. His premium dropped about $400 a year. Same driver, same car, same address. Just a credit card balance.
Second, use the Auto Coverage Optimizer to see if you’re paying for coverage you don’t need.
Third, shop around. This is the most powerful tool against AI pricing. Every carrier uses different models. One might weigh credit heavily; another might weigh prior insurance history. You don’t know which one likes your profile until you get quotes. I’ve seen people save $800 a year by switching to a carrier that had a different algorithm.
But here’s the catch. Shopping around too often can hurt you. Some insurers use “inquiry frequency” in their models. If you get quotes from ten carriers in a month, you look desperate. Space it out. Get quotes every two years, or when your premium jumps more than roughly 15%.
Now, what about health insurance AI? That’s even murkier. Health insurers use algorithms to set premiums on the individual market, but they’re heavily regulated by the ACA. They can’t charge you more for pre-existing conditions. But they can steer you toward plans with narrower networks or higher out-of-pocket costs based on your predicted utilization.
Someone I worked with – let’s call him David – was a healthy 50-year-old. He bought a cheap bronze plan on the Marketplace. His premium was low, but his deductible was around $7,000. He never got sick, so he thought he was winning. Then he had a heart attack. He owed around $7,000 before his coverage kicked in. He didn’t have that much savings. He went into medical debt.
The algorithm that recommended that bronze plan to him was working as designed. It knew his age and health history suggested low utilization. But it didn’t know he had a family history of heart disease. The algorithm isn’t your friend. It’s the insurer’s tool.
The Health Plan Comparator can help you see beyond the premium.
Don’t let the algorithm trick you into being underinsured.
So here’s what I want you to do about AI underwriting.
First, accept that it’s happening. Your data is being used to price your insurance. That’s not illegal – yet.
Second, manage the factors you can control. Improve your credit. Pay down balances. Don’t file small claims. Drive safely. Bundle home and auto if possible. Install a usage-based device if you’re a good driver – that can override the zip code penalty.
Third, shop around every two years. Different algorithms give different results. You might find a carrier that weights driving record more heavily and credit less heavily.
Fourth, use the tools. The Auto Coverage Optimizer and Health Plan Comparator help you see where you might be overpaying or underinsured.
Fifth, contact your state representative. Ask them to support AI transparency laws. You have a right to know why you’re being charged what you’re being charged.
I know this feels overwhelming. Insurance was already confusing. Now there’s a black box making decisions about your money. But you’re not powerless. You can’t see inside the black box – yet – but you can see your own numbers. And you can change those.
Angela – the woman with the 22% increase – she switched carriers. Her new premium was only about 5% higher than her original. She also paid down her credit card balance and increased her deductible from $500 to $1,000. The next year, her premium actually went down.
She told me “I still don’t like the algorithm. But at least I’m not paying for its mistakes anymore.”
P.S. Kevin – the one who paid down his credit card – he called me last month. His premium dropped another $100 after he bundled his renter’s insurance with the same carrier. He said “I’m still paying more than my neighbor who has two DUIs. That doesn’t seem fair.” It’s not. But it’s the system we have.
By Marcus
