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Many companies reward their most loyal customers with incentives, discounts and freebies. But in car insurance, the opposite can actually happen. A driver can be punished with a higher premium just for being loyal to the company.

It's called price optimization, and it happens to lots of people all the time. A driver could have no history of accidents but all of a sudden their car insurance goes up.

Justin Mulholland is a financial adviser whose company manages money for people at the University of Michigan. He owns a Ford Focus, a Buick LeSabre and a Chevy Venture. He got a pretty good rate from the insurance company he chose. And for two years, all was well.

Then he received a notice that his premium was going up. The increase "was pretty substantial — it was about $100 a year," Mulholland says.

A guy who helps people manage their money most likely pays attention to his own as well.

"I got on the phone with another friend of mine who sells insurance and he got me a deal with Cincinnati Insurance that brought it down to what it was before, and it's stayed there ever since," Mulholland says.

"They'll give you a discount for loyalty. But, they'll give you a 10 percent discount after they've raised your rate 25 percent."

- Bob Hunter, Consumer Federation of America

Mulholland's lack of loyalty in the face of a premium increase means he's less likely to be snared by the insurance practice called price optimization.

"Well, it's really profit maximization," says Bob Hunter, with the Consumer Federation of America. He says insurance companies can buy software that compiles an astonishing amount of data on everyone who buys almost anything, anywhere.

"They have all the information on what you buy at your grocery store. How many apples, how many beers, how many steaks," he says. "They have all the information on your house. They have incredible amounts of information on are you staying with Direct TV when Verizon is cheaper."

A sophisticated algorithm crunches that data and spits out an index showing how sensitive a customer is to price increases. Only the insurance company knows the index. Clients may see a loyalty discount on their premiums but Hunter says it may not be what it seems.

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"They'll give you a discount for loyalty," Hunter says. "But, they'll give you a 10 percent discount after they've raised your rate 25 percent."

This can mean as much as a 30 percent rate difference between two drivers with the same risks. Only one's a shopper and one's not.

Rich Piazza, chief actuary for the Louisiana Department of Insurance, says this it's pretty complicated.

"As regulators, we're not always on the cutting edge of these changes in modeling and ratemaking practices, so we have to catch up sometimes," he says.

But unlike Hunter, Piazza's not convinced the practice is widespread. And he's not yet sure that it's wrong. He says insurance companies have many legitimate reasons to raise rates or charge a customer more than the next person. The company's costs go up. Every driver is different, and poses different risks.

"Insurance pricing rating is discriminatory," Piazza says. "It always has been."

But is it fair to discriminate based on a quality totally unrelated to risk? Maryland, Ohio and California say it isn't and have explicitly banned price optimization.

So far only Allstate has disclosed that it uses the price optimization tool. In a statement, the American Insurance Association said "the auto insurance market remains very competitive and consumers have numerous options available to them."

Hunter says even if all people do is suspect they're being price optimized they can still fight back.

"Shopping around will foil price optimization because if you shop around, the insurance company's going say, 'This guy's gonna leave if I raise the price, so let's hold it down.' "

Cars

insurance

In Arabic, haqq is the word for truth.

Last week in the United Arab Emirates, group of Muslim scholars held what they called a "haqqathon" – a hackathon meant to create new ways for Islamic scholars to connect with young Muslims and, by doing so, defuse violent extremists like the self-proclaimed Islamic State.

The competition took place in the UAE capital Abu Dhabi, on the sidelines of the Forum for Promoting Peace in Muslim Societies. More than 400 Muslim clerical scholars — Sunni, Shiite and others — gathered for the second year to talk about how extremists are hijacking Islam, and what to do about it.

The urgency for something like the haqqathon is clear, because groups like ISIS have had great success recruiting young people on social media.

"We do want to start speaking the same language as our youth," said Zeshan Zafar, the group's executive director. "What is that language, and who are the individuals that need to be part of that whole mix as well. So that's vital for us."

Zafar, working with the Virginia-based business incubator Affinis Labs, helped choose the participants, who included a journalist with the British newspaper The Guardian, a psychologist, an imam who is also an attorney in the U.K., a consultant to the pharmaceutical industry and others.

"I'm hoping that in the channels and the energy that is being created here we'll have something that's very, very relevant, and we actually invest into, incubate until we get an actual end product that is really worthy and ... develops that connection between scholars, all the way down to the grassroots," Zafar said.

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Five teams competed over two and a half days for funding to get their project up and running. The teams had to develop an idea, have their designers and programmers turn it into a running prototype, and then present it to a panel of judges.

One team came up with Marhubba — a website and app that would answer young Muslims' questions about male-female relationships in "the Prophetic way." Team member Waji-hat Ali, a playwright from Pakistan, made the pitch.

"Welcome to Marhubba.com," he said, "where [students] and traditional Islamic scholarship meet to learn about sex, relationships, marriage and intimacy in an honest and relevant manner."

A panel of judges, a global online audience and everyone in the room cast their ballots electronically. Think of it as an American Idol final round meets "countering violent extremism."

The judges chose a winner: Champions of Islam, a social media site where users can upload photos of everyday Muslim heroes.

But they unexpectedly presented a "people's award," to Marhubba, which will also be funded.

That night, the young Muslim entrepreneurs could be found at a celebratory dinner on the hotel rooftop, overlooking the lights of Abu Dhabi, still pitching ideas to one another and making more connections.

Islam

New data from the U.S. Census Bureau indicate a change in the flow of immigrants arriving here from around the world, and offer a look at what the nation will look like the future.

The political debate today in Washington remains focused on the status of Hispanic immigrants – people from Latin America still dominate the population of legal and undocumented immigrants in the US. But it's now China that sends more immigrants to the United States. According to the Census Bureau's American Community Survey, 147,000 Chinese arrived in 2013 — the last year for which full data is available. India is second; the source for 129,000 immigrants to the US. Mexico was the country of origin for 125,000 immigrants. Korea, the Philippines and Japan are also leading countries of origin. The data include undocumented immigrants.

The new numbers were presented last week the Population Association of America conference in San Diego.

According to Eric Jensen, Statistician/Demographer with the Census Bureau's Population Division, China's rise to the top comes amid a decade-long surge in Asian migration, and a simultaneous decline in people arriving from Mexico.

Jensen says the change in immigrant flows affects the racial and ethnic makeup of the United States.

"While Hispanics are still the largest racial or ethnic minority group, a larger percentage of the Asian population was foreign-born (65.4) compared with the Hispanic population (35.2) in 2013. Given the numbers above, it is likely that the contribution of immigration to overall population growth will be greater for Asians than for Hispanics," says Jensen.

The new numbers do not surprise demographers.

"We have continued employment opportunities in the United States for people in Asian countries, some in high-tech and engineering," said William Frey of the Brookings Institution. "Many come here to study in graduate schools and wind up staying here."

In Mexico, the economy has gradually improved and population growth is slowing, Frey said.

"On the other hand," he added, "a lot of the kinds of low-wage jobs that attracted people from Mexico and other Latin American countries to the United States have dried up due to the Great Recession and the word has gotten out."

Frey is the author of Diversity Explosion: How New Racial Demographics Are Remaking America. He says the diversity boom America will experience in the next few decades will be as important as the Baby Boom was in the last half of the 20th century.

"As the older, Anglo population grows older, we need all of these younger people from Latin America and Asia and elsewhere to build up our labor force. So this is a different country we're going to have," says Frey.

As a U.S. territory with tropical weather and beautiful beaches, Puerto Rico has a lot going for it. But there are downsides to living on an island. A big one is the cost of energy.

All the electricity on the island is distributed by the government-owned Puerto Rico Electric Power Authority, also known as PREPA. Power on the island costs more than in any U.S. state, except Hawaii.

And that's not the biggest problem.

"PREPA is very damaged, very distressed," says Lisa Donahue, an expert on fixing utility companies that are in trouble. "PREPA needs a lot of work."

Puerto Rico is caught in a financial crisis and fixing the energy company is crucial to the island's economic future.

After years of borrowing to cover budget deficits, the U.S. territory is more than $70 billion in debt. The biggest chunk of the debt, more than $9 billion, is owed by PREPA.

Donahue is PREPA's chief restructuring officer. She was hired by the company's board to overhaul and modernize the power company.

She recently told skeptical members of the island's Senate, "We have one chance to do this right, and to set PREPA on the right path and to fix it for the future of Puerto Rico."

The high cost of electricity and the problems with the power company are a leading topic in the newspapers, cafes and on talk radio in Puerto Rico.

Sonia Vazquez met us outside the power company offices in San Juan, carrying a file of bills and correspondence some eight inches thick. She says her monthly power bills make no sense.

"Why am I paying so much?" Of her monthly statement, she says, "It's really difficult to understand it."

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Sonia Vazquez, residential energy customer in San Juan is fighting PREPA, the energy utility agency. Marisa Penaloza/NPR hide caption

itoggle caption Marisa Penaloza/NPR

Sonia Vazquez, residential energy customer in San Juan is fighting PREPA, the energy utility agency.

Marisa Penaloza/NPR

Nearly four years ago, Vazquez began contesting part of her bill each month. The fearless 60-year-old now owes the power company nearly $10,000 and has no intention of paying.

"They're supposed to detail to me everything that they're charging me," she says. "Why am I paying something that I don't know what's contained in it?"

Many in Puerto Rico share Vazquez's dissatisfaction with the island's state-owned power company including, perhaps surprisingly, Jose Maeso, Puerto Rico's top energy official.

He says there are many problems with PREPA.

"We have about 50 percent more of the capacity than we need right now. Along with that," he says, "most of the plants are very old — 50, 60 years. The infrastructure is not prepared to be modern, to be competitive."

It's a grid and series of power plants built when Puerto Rico nurtured dreams of industrialization. Decades later, many power plants sit idle, but customers are still paying for them.

But only some of the customers are paying. Nearly a third of PREPA's accounts receive subsidized rates that require them to pay little or nothing. That includes many large users. City governments and hotels are officially exempt from paying.

Maeso says others, including the schools and the island's train system, simply don't pay. The rest of PREPA's customers pick up the tab.

"All of us are subsidizing whatever somebody else doesn't pay, even the government itself," he says. "But that definitely needs to stop in order for us to fix the whole system."

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An energy restructuring hearing in San Juan. Marisa Penaloza/NPR hide caption

itoggle caption Marisa Penaloza/NPR

An energy restructuring hearing in San Juan.

Marisa Penaloza/NPR

After decades of mismanagement, for Puerto Rico's power company, time has run out.

It's $9 billion in debt and now unable to make scheduled payments to creditors. It's operating week to week under a series of temporary agreements with Wall Street firms. And some of those bondholders have said they want to raise rates.

Maeso is concerned about the impact higher rates would have on the island's economy, and its ability to retain factories and large employers who may consider moving elsewhere.

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As for residential customers, like Vazquez, Maeso says they'll adjust by turning off lights and not using their air conditioners.

It's advice that makes Vazquez angry.

"They don't really care about us," she says. "They just tell me, 'Don't use your dryer. Why don't you put your clothes outside?' They really think that the way we can do it is sacrificing, and paying more. But they subsidize everyone except the people that work."

Puerto Rico's energy problems may come to a head in July when the power authority is expected to default. If that happens, it will be another blow to the island's already staggering economy.

Puerto Rico

energy

financial crisis