In underwriting and rating individual accident and sickness coverage in Virginia, some distinctions between applicants are lawful and others cross into unfair discrimination. Which practice crosses the line?

Why A is correct

Virginia's unfair-discrimination prohibitions for accident and sickness insurance — Va. Code § 38.2-508.1 and Va. Code § 38.2-508.2 — bar distinctions between individuals of the same class and substantially equal expectation of life that are not grounded in sound actuarial principles. Underwriting may lawfully sort people into risk classes and price those classes differently, but a differential with no actuarial basis is arbitrary and unfair. The Virginia Bureau of Insurance polices this line, and an unjustified differential exposes the insurer to corrective action.

Why the other options are wrong

• B) Class rating supported by sound actuarial principles is the lawful method; it is the opposite of unfair discrimination.
• C) Declining a genuinely uninsurable risk is ordinary underwriting, not discrimination, so long as it rests on the applicant's actual condition rather than an arbitrary distinction.
• D) A non-smoker discount with actuarial support is a justified class distinction, precisely what the law permits.

Memory hook

Same class, no actuarial reason, different price — that's unfair discrimination.