The Commercial Insurance Deregulation Act was established to serve which function?

• A. To reduce competition
• B. To increase regulatory control
• C. To encourage price competition among insurers who write commercial lines insurance
• D. To standardize rates across carriers

Answer: (C)

Deregulating commercial insurance shifts pricing away from tight regulator-approved rates and toward market-driven pricing for commercial lines. The function is to encourage price competition among insurers who write commercial lines insurance. By loosening rate controls, insurers compete more on price and terms, which can lead to lower costs and more choices for businesses. Regulators still oversee to protect solvency and prevent unfair practices, but the emphasis becomes competition, not rate standardization or increased control. The other options describe outcomes that run counter to this goal: reduced competition, more regulatory control, or uniform rates across carriers would undermine the intended effect of deregulation.