Okuzeka
Insurance vocabulary · Insurance Market & Finance

Solvency

Meaning in insurance, with examples

/ˈsɑːlvənsi/nounCommon term

In insurance, solvency means: An insurer's ability to pay all its future claims and debts, measured by comparing its capital with the amount regulators require.

In Turkish: ödeme gücü, sermaye yeterliliği, mali yeterlilik

How it is used

A central idea in insurance regulation. Companies report a solvency ratio; in the EU the rules are known as Solvency II. If solvency falls below the required level, regulators can demand new capital or limit new business. The adjective is 'solvent'.

Example sentences

  1. Our solvency ratio stands at 180 percent, well above the regulatory minimum.

  2. The regulator asked for a capital increase after the company's solvency fell below the limit.

Common collocations

  • solvency ratio
  • Solvency II
  • solvency capital requirement
  • solvency position
  • reserveMoney an insurer sets aside on its balance sheet to pay claims and other obligations it expects in the future.
  • combined ratioThe loss ratio plus the expense ratio. Below 100 percent means the insurer made an underwriting profit; above 100 percent means an underwriting loss.
  • reinsuranceInsurance bought by insurance companies to pass part of their risks to another company, so that very large or numerous losses do not threaten them.
  • actuaryA specialist who uses statistics and mathematics to measure risk, calculate premiums and estimate how much money an insurer must keep for future claims.

More terms: Insurance Market & Finance

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This page explains English vocabulary for learners. It is not financial advice.