The Spectrum Approach to Insurer Financial Oversight – PC
Adopting a binary approach to the consideration of an insurer’s financial strength; i.e. that the carrier is either solvent (good) or insolvent (bad), is a common and potentially costly due diligence mistake. As historically not many insurers become insolvent (though more do so in the property & casualty and medical health insurance sectors) , distributors of their products may conclude that carrier financial oversight is therefore either unnecessary or something to be passed over lightly. While we agree that insolvency always equals a bad outcome, it does not follow that all solvent companies are necessarily “good.”
