State RegulationsMA specificDifficulty 3/5
Which statement correctly distinguishes lawful risk classification from unfair discrimination under Massachusetts insurance law?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
M.G.L. c. 175, § 120 and M.G.L. c. 176D, § 3(7) draw the line at the class boundary: rates may differ between classes built on sound actuarial principles, but individuals of the same class and essentially equal expectation of life must be treated alike in premiums, charges, and dividends. The Massachusetts Division of Insurance distinguishes lawful classification from discrimination on exactly this basis. Profitability does not legitimize unequal treatment within a class, and discriminatory rates violate the statutes even when a policy is still issued.
Why the other options are wrong
- A) Premium differences between actuarially distinct classes are lawful; M.G.L. c. 176D, § 3(7) condemns only unequal treatment of similarly situated individuals.
- C) M.G.L. c. 176D, § 3(7) reaches discriminatory rates and charges, not only outright refusals to insure.
- D) Profitability is not the statutory test; M.G.L. c. 175, § 120 requires equal treatment within a class regardless of the insurer's margins.
Memory hook
Between classes, rate away; within a class, treat alike — the class line is the legal line.