What action could lead to an insurer being suspended from operation?

An insurer can face suspension from operation for the subsequent violation of a cease and desist order. A cease and desist order is a directive issued by a regulatory authority, such as the Department of Insurance, which requires the insurer to stop certain practices that are deemed unlawful or unfair. If the insurer fails to comply with this order, it demonstrates a disregard for regulatory authority and can be seen as a serious violation of law. The purpose of such orders is to protect policyholders and maintain the integrity of the insurance market. Consequently, violating these orders can result in severe penalties, including suspension of the insurer’s operational license.

In contrast, while changing rates without prior approval and failing to file required reports timely can lead to administrative penalties, they may not be as immediate or severe as a violation of a cease and desist order. Furthermore, implementing a new marketing strategy is typically within the company’s discretion and does not normally lead to sanctions unless it involves illegal practices or breaches existing regulations. Therefore, the violation of a cease and desist order stands out as a critical action that can directly compromise an insurer's ability to operate legally.