The NAIC Information System and the Use of Economic Indicators in Predicting Insolvencies

There has been and will continue to be strong concern among insurance industry regulatory, insurance company executives, and consumers regarding insurance company solvency. Public interest in minimizing insurance company insolvency is only natural, since insurance companies have prepaid contracts (quasi-trust accounts) with the insureds. However, it wasn't until the early 1970's that the National Association of Insurance Commissioners (NAIC) proposed a uniform system of financial ratios to identify the property-liability companies which required closer financial surveillance and supervision by the appropriate state insurance department.