Question

What is the potential consequence of an insurer being solvent but physically insolvent?

a.

Loss of accreditation from regulatory agencies.

b.

Inability to pay claims despite being technically solvent.

c.

Requirement to increase premium rates.

d.

Exemption from financial reporting requirements.

Posted under IC 92 Actuarial Aspects of Product Development

Answer: (b).Inability to pay claims despite being technically solvent. Explanation:An insurer may be solvent but physically insolvent, meaning they may not have enough money to pay claims despite being technically solvent.

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Q. What is the potential consequence of an insurer being solvent but physically insolvent?
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