Final answer:
A Cease and desist order is what requires an individual to stop participating in an activity that is found to be violating the insurance code. Insurance regulators sometimes set low premiums, but insurance companies may opt to withdraw from the market if forced to maintain unsustainably low rates.
Step-by-step explanation:
The correct answer to the question of what would require an individual to stop participating in a specific activity if the commissioner believes it's violating the insurance code is A) Cease and desist order. This legal order is issued by a government authority or court to halt an activity that is deemed illegal or in violation of regulations. It is used to prevent continuing harm or as an immediate remedy while further legal action is considered.
In the context of insurance, when insurance regulators attempt to set low premiums, over time the fundamental law of insurance must hold—premiums collected must cover the pay-outs. If insurance companies try to charge an actuarially fair premium to the group as a whole instead of each group separately, they risk financial losses. Groups with low risk may opt-out, while higher risk groups cost more to insure, leading to an unsustainable economic model. Ultimately, the company might have to raise premiums, which can dissuade low-risk consumers from buying insurance, or potentially decide to withdraw from the market, as seen with several insurers in New Jersey and State Farm's decision to stop selling property insurance in Florida.