What is the definition of Solvency?
Solvency refers to the ability of insurance companies to make good the claims of its policyholders.
Regulatory departments check to insurance an insurance company's solvency. State insurance commissions require regular reports from insurance companies as part of their early warning system. When a company's ratios fall below the prescribed standards, the state insurance commission can intervene to ensure that the company does not become insolvent.
To ensure solvency, states have regulations regarding the insurance company's surplus requirements, minimum capital requirements, investment requirements and limits as well as statutory accounting conventions. The state insurance commission also looks into cash flow and corporate activities (sales, operations, investments and marketing) as well financial ratio tests.
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- Specified Disease Coverage
- Spendthrift Trust Clause
- Split-Dollar Life Insurance Plan
- Spread of Risk
- Stacking
- Standard Risk Class
- Statutory Accounting Principles (SAP)
- Stock Insurance Company
- Straight Life Annuity
- Structured Settlement
- Soft Market
- Single Premium Policies
- Single Premium Annuity
- Short-Term Disability Income Insurance
- Shared Market
- Sewer Back-Up Coverage
- Severity
- Settlement Options
- Separate Account
- Self-Insurance