Here's something advisors should be telling clients more often: Shop around for car insurance, because you may be getting ripped off. Insurance experts at the Consumer Federation of America are warning consumers they may be paying too much for their auto insurance. 

The dishonest practice called “price optimization,” referred to as “PO” by insurers, says CFA, uses personal data and statistical models to measure how likely each customer is to shop around and how much of a price increase the customer will tolerate. 

“You may have been with your auto insurance company for many years. You may even receive a loyalty discount of 5 or 10 percent on your bill. Watch out!” said J. Robert Hunter, the director of insurance at CFA and a former Texas Insurance Commissioner, in a press release. “Your insurer may be increasing your premium by far more than your loyalty discount, precisely because you have been so loyal.”

Insurers push up premiums based on how unlikely it is that a customer will shop around for a better price, even if the driver has never caused an accident or been issued a ticket, CFA says.

“Newly revealed insurance practices show that reasons you might be vulnerable to price increases are such things as staying with one insurer for many years, never calling the company with complaints or simply buying your insurance through an agent rather than online,” said Hunter.

Research shows that 24 percent of drivers never shop for car insurance, 34 percent rarely shop and 16 percent only shop every few years, so almost three-quarters of policyholders are candidates for price optimization, says the CFA.

However, Michael Barry, vice president, media relations at the Insurance Information Institute, a non-profit organization funded by the insurance industry, said, “The idea that auto insurers take advantage of loyal customers is hard to take seriously. The insurance industry is heavily regulated. If the regulators were concerned about predictive analytic technologies, they would either ban or restrict their use."

“When a consumer gets a renewal notice with a substantial increase in their premium, the next step is not to pay the bill, but pick up the phone and ask the company what this is all about. If you are not satisfied with the answer, it is time to shop around,” Barry added.