2
QuizMultiple Choice

Financial Operations of Insurance

Question 2 • (AG Q4) Financial Literacy: 25-26 (JRush)

Insurance Company A is going through a period of financial difficulty and state regulators have stepped in. This process is referred to as _____.

Answer
A
regulation review
B
exposure reduction
C
rehabilitation
D
insolvency

Explanation

When state regulators step in to address an insurer’s financial problems and try to restore it to stable operation, the process is called rehabilitation. Insolvency means the company cannot meet its financial obligations; it describes a financial condition, not the regulatory process.

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