Sentence Correction (SC) | Before 1988, insurance companies in California were free to charge wha

GMATNinja egmat VeritasPrepKarishma generis

I could not understand how coma + verb-ing ie needing modifies the noun - insurance companies - by giving more info about HOW / cause-effect relationship?

In (B) why could not IT act as a placeholder pronoun ? This option is also totally bad since we need FROM , not BY regulators . Am I correct?
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