Which statement describes file-and-use laws?

Which statement describes file-and-use laws?

• A. Rates cannot be changed during the policy term
• B. Rates are set by the federal government
• C. Rates must be filed and approved before use
• D. Rates may be used immediately but must be filed with the state within a specified period (correct)

Answer: (D)

This question tests how the use-and-file (file-and-use) approach to insurance rate regulation works. In this approach, insurers can start using their rates right away after filing them with the state regulator, but there is a deadline by which those rates must be filed with the regulator. The regulator may review them afterward, but immediate pricing is allowed. So the correct statement captures that rates may be used immediately but must be filed with the state within a specified period. The other choices don’t fit because federal authorities don’t set insurance rates, prior-approval requires rates to be filed and approved before use, and the idea that rates cannot change during the policy term describes a different concept not tied to how filing and use are regulated.

This question tests how the use-and-file (file-and-use) approach to insurance rate regulation works. In this approach, insurers can start using their rates right away after filing them with the state regulator, but there is a deadline by which those rates must be filed with the regulator. The regulator may review them afterward, but immediate pricing is allowed.

So the correct statement captures that rates may be used immediately but must be filed with the state within a specified period. The other choices don’t fit because federal authorities don’t set insurance rates, prior-approval requires rates to be filed and approved before use, and the idea that rates cannot change during the policy term describes a different concept not tied to how filing and use are regulated.