How is an "insolvent insurer" defined?

An "insolvent insurer" is defined as an insurer unable to meet its obligations as determined by a court. This situation arises when a company does not have enough assets to cover its liabilities and debts, leading to a legal recognition of its inability to fulfill policyholder claims and other financial responsibilities.

Judicial involvement is key in establishing insolvency, as a court assesses the financial condition of the insurer based on its assets versus its obligations. This legal determination is important because it helps protect policyholders and creditors, often initiating a process for liquidation or restructuring of the insurer's obligations under court supervision.

The other options do not accurately define insolvency. For instance, opting out of coverage does not pertain to an insurer's financial status; ceasing operations due to financial losses may imply insolvency but is not a formal legal determination; and the expiration of a license suggests regulatory issues rather than financial insolvency. Thus, the clear legal definition of being unable to meet obligations, as assessed by a court, is what makes option B the correct choice.