What Is Solvency?

Solvency is a basic indicator that must be considered when measuring the financial status of an insurance company. Solvency is the ability of an insurer to repay debt. The company's assets must be greater than its liabilities, and the difference between the total recognized assets and liabilities is the owner's surplus.

Solvency

The solvency supervision is implemented by the CIRC, that is, inspection

Refers to the ability of an insurance institution to perform its compensation or payment obligations, and is also a comparison of the financial strength of an insurance institution with its own risk liability. An insurance institution is an enterprise operating at risk. It must be prepared to deal with various disasters at any time. This must require sufficient capital accumulation and a minimum solvency. This is not only the need to protect the interests of the insured, but also the need for the stable operation of the insurance company itself. Therefore, governments of all countries take the solvency of insurance companies as the main goal of supervision. China s Insurance Law stipulates: "Insurance companies shall have the minimum solvency appropriate to their business scale. The difference between the actual assets of the insurance company and the actual liabilities shall not be lower than the amount specified by the financial supervision and administration department. Increase capital to make up the difference. "