Which statement about state-developed rates is true?

Which statement about state-developed rates is true?

• A. State-developed rates are mandated for insurers under state rate laws
• B. State-developed rates are optional
• C. State-developed rates apply only to health insurance
• D. State-developed rates are set by federal law

Answer: (A)

State rate regulation requires insurers to use rates that are developed or approved by the state, typically through the state insurance department and rating bureaus. This means insurers must apply those rates under the state rate laws, rather than choosing their own or relying on federal directives. The purpose is to keep pricing fair, predictable, and within regulated limits. That’s why the statement is true: state-developed rates are mandated under state rate laws. They aren’t optional for insurers, they aren’t limited only to health insurance, and they aren’t set by federal law.

State rate regulation requires insurers to use rates that are developed or approved by the state, typically through the state insurance department and rating bureaus. This means insurers must apply those rates under the state rate laws, rather than choosing their own or relying on federal directives. The purpose is to keep pricing fair, predictable, and within regulated limits.

That’s why the statement is true: state-developed rates are mandated under state rate laws. They aren’t optional for insurers, they aren’t limited only to health insurance, and they aren’t set by federal law.