When is an insurer considered solvent?

An insurer is considered solvent when its assets are sufficient to cover its liabilities. The correct answer emphasizes that assets should be the same or greater than claims and operating costs. This means that when an insurer has assets that can adequately meet all its obligations, including the claims it is expected to pay and its operational expenses, it demonstrates a solid financial standing.

Solvency is crucial because it indicates that the insurer can fulfill its financial commitments to policyholders without risk of default. This measure goes beyond just overall financial health; it specifically relates to the insurer's ability to meet both short-term and long-term obligations. Therefore, having assets that are at least equal to or exceed the total of claims and operating costs ensures that the insurer can maintain operations and honor its promises to policyholders.

In contrast, while the other options touch on financial aspects, they do not fully capture the essence of solvency as defined in insurance terms. For example, stating simply that assets exceed liabilities does not account for the precise nature of claims and operational expenses in relation to those assets, leading to potential misinterpretation of the insurer's ability to meet its obligations.