State RegulationsFL specificDifficulty 2/5
A Florida insurer charges two groups of policyholders with identical loss exposures substantially different premiums for the same health coverage, with no actuarial justification. This practice is:
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Under the Florida Insurance Code, rates that classify risks without a sound actuarial basis, so that similarly situated insureds pay materially different premiums for the same coverage, are unfairly discriminatory. The Office of Insurance Regulation reviews rate filings and may disapprove rates that fail the standards of adequacy, non-excessiveness, and fairness.
Why the other options are wrong
- A) Signatures on applications do not legitimize an unfairly discriminatory rate structure.
- B) Solvency requires adequate rates, not unjustified differences between similar risks.
- C) No CFO consent mechanism authorizes unfairly discriminatory rates; the standard applies regardless.
Memory hook
Same risk, same price zone - or OIR says no.