Final answer:
Insurance regulation aims to supervise insurance rates, promote availability, and prevent price-fixing, but it does not prohibit insurance-rating, a necessary process of determining premiums based on risk. Instead, regulations ensure this practice is fair and non-discriminatory. The correct option is D.
Step-by-step explanation:
The purpose of insurance regulation includes ensuring that insurance rates are reasonable, promoting the availability of insurance, and preventing unfair practices like price-fixing.
However, the option that does NOT represent a purpose of insurance regulation is prohibiting insurance-rating. Insurance-rating, which involves assessing risk and determining premiums, is a fundamental aspect of the insurance industry and is not prohibited by regulations. Regulations focus on how rating is conducted to ensure fairness and avoid discrimination but do not prohibit the practice itself.
Regulations allow insurance companies to set premiums based on actuarially fair assessments, which require balancing between different risk groups. If premiums are too low, they must be subsidized by taxpayers or higher premiums paid by another group. The notion of regulations mandating the purchase of insurance to prevent adverse selection and ensure market stability is linked to laws like the Patient Protection and Affordable Care Act (Obamacare), which aims to provide affordable health insurance, require health insurance coverage, and lower healthcare costs.
Hence, Option D is correct.