What is the Definition of Insolvency?

What is the Definition of Insolvency?

Insurer’s inability to pay debts. Insurance insolvency standards and the regulatory actions taken vary from state to state. When regulators deem an insurance company is in danger of becoming insolvent, they can take one of three actions: place a company in conservatorship or rehabilitation, if the company can be saved, or in liquidation, if salvage is deemed impossible. The difference between the first two options is one of degree—regulators guide companies in conservatorship but direct those in rehabilitation. Typically the first sign of problems is inability to pass the financial tests regulators administer as a routine procedure. (See Liquidation; Risk-based capital)

Source: Insurance Handbook A guide to insurance: what it does and how it works | https://www.iii.org/

Label: Insurance
Theme: Dictionary of Insurance Terms

Other Questions: What is the definition of Annuity?

What is the Definition of Insolvency?

What is the Definition of Insolvency?

You can find random definition and meaning of insurance terms below:


Meaning of Hybrid Annuity in Insurance Terms

An annuity with features of both fixed and variable annuities. (See Fixed annuity; variable annuity)


Meaning of Identity Theft Insurance in Insurance Terms

Coverage for expenses incurred as the result of an identity theft. Can include costs for notarizing fraud affidavits and certified mail, lost income from time taken off from work to meet with law enforcement personnel or credit agencies, fees for reapplying for loans and attorney’s fees to defend against lawsuits and remove criminal or civil judgments.


Meaning of Immediate Annuity in Insurance Terms

A product purchased with a lump sum, usually at the time retirement begins or afterwards. Payments begin within about a year. Immediate annuities can be either fixed or variable.


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