Which term describes determining whether the continued operation of any insurer might be financially hazardous to policyholders, creditors, or to the public in general?

Which term describes determining whether the continued operation of any insurer might be financially hazardous to policyholders, creditors, or to the public in general?

• A. Certificate of Authority
• B. Solvency
• C. Cease and Desist Order
• D. Rebating

Answer: (B)

Solvency. This term refers to the insurer’s ability to meet its financial obligations to policyholders and creditors as they come due. Regulators assess solvency to ensure the company has enough capital, reserves, and financial strength to pay claims, and they monitor factors like capital adequacy and reserves. If an insurer’s solvency is in doubt, regulators may intervene to protect policyholders and the public. The other terms describe different regulatory concepts: a Certificate of Authority is the license to operate; a Cease and Desist Order stops unlawful practices; Rebating is an illegal inducement to buy insurance.

Solvency. This term refers to the insurer’s ability to meet its financial obligations to policyholders and creditors as they come due. Regulators assess solvency to ensure the company has enough capital, reserves, and financial strength to pay claims, and they monitor factors like capital adequacy and reserves. If an insurer’s solvency is in doubt, regulators may intervene to protect policyholders and the public. The other terms describe different regulatory concepts: a Certificate of Authority is the license to operate; a Cease and Desist Order stops unlawful practices; Rebating is an illegal inducement to buy insurance.