P&CMAhard
Under M.G.L. c. 175, the minimum paid-in capital and surplus requirements that a Massachusetts-admitted property/casualty insurer must satisfy are primarily designed to:
AEstablish the maximum commission a producer can earn on property and casualty policies sold in the Commonwealth
BSet the floor for premium tax owed to the Commonwealth
Provide a solvency cushion protecting policyholders against unexpected loss and reserve deficiencies
DDetermine which Massachusetts courts may hear coverage disputes
Why this is the answer
Massachusetts scales minimum paid-in capital and surplus requirements by the lines of insurance an insurer writes. The purpose is solvency protection: capital absorbs unexpected adverse loss development and reserve deficiencies before policyholder claims are impaired, supporting DOI's prudential oversight under c. 175 §48.
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