Which statement about the two NAIC model rate regulation bills is true?

• A. They aimed to ensure rates were excessive and unfairly discriminatory
• B. They allowed cooperation in rate setting if it did not hinder competition
• C. They did not address rate discrimination
• D. They established a federal rate-setting agency

Answer: (B)

The concept being tested is how NAIC model rate regulation bills balance regulation with competition. These models are designed to prevent unfair, excessive, or discriminatory rates while preserving competitive pricing. The statement that is true reflects that insurers may cooperate in rate setting as long as that cooperation does not hinder competition—sharing information or performing joint actuarial analyses is allowed under antitrust safeguards, but explicit rate fixing or collusion is not. The bills do not aim to push rates to be excessive or discriminatory, they do the opposite, and they do not create a federal rate-setting agency.