What must an insurer demonstrate to prove financial solvency?

To prove financial solvency, an insurer must demonstrate the ability to meet long-term obligations. This means the insurer has sufficient assets, earnings, and reserves to cover all current and future claims, ensuring that policyholders can receive payouts when necessary. Financial solvency is crucial for an insurer as it instills confidence in consumers, regulators, and investors that the company can fulfill its commitments over time.

High customer satisfaction ratings, strong marketing strategies, and the number of claims processed do not directly correlate with an insurer's financial stability. While customer satisfaction can influence the overall success and reputation of an insurer, it does not provide a measure of the company's financial health. Similarly, having strong marketing strategies might help grow the customer base but does not guarantee the financial means to honor claims. Lastly, processing a large number of insurance claims indicates activity but does not reflect the insurer’s financial capacity to manage those claims in the long run. Thus, demonstrating the ability to meet long-term obligations is the primary indicator of an insurer’s financial solvency.