State RegulationsMA specificDifficulty 1/5
Under M.G.L. c. 176D, § 3(7), which conduct constitutes unfair discrimination?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
M.G.L. c. 176D, § 3(7) makes it an unfair practice to make or permit unfair discrimination between individuals of the same class and of essentially the same hazard and expectation of life in the premiums or charges for insurance. M.G.L. c. 175, § 120 carries the same principle into life insurance rates and dividends. Actuarially supported classification among classes is lawful; unequal treatment of similarly situated individuals within a class is what the Massachusetts Division of Insurance prohibits.
Why the other options are wrong
- A) Sound actuarial classification is the lawful foundation of rating; the prohibition in M.G.L. c. 176D, § 3(7) targets unequal treatment within a class, not the existence of classes.
- B) Applying published underwriting standards uniformly is legitimate underwriting, not unfair discrimination under M.G.L. c. 176D, § 3(7).
- C) Uniform rates within a class treat like risks alike, which is the opposite of the discrimination M.G.L. c. 176D, § 3(7) forbids.
Memory hook
Different rates for the same risk = unfair discrimination; different rates between different classes is fine.