In order to be considered safe and solvent, what must insurers maintain?

For insurers to be regarded as safe and solvent, it is essential for them to maintain adequate reserves for the protection of policyholders. This means that they must set aside sufficient funds to cover future claims, ensuring that they can fulfill their financial obligations to policyholders when necessary. Adequate reserves act as a financial buffer, safeguarding against unexpected losses and maintaining the insurer's ability to provide coverage as promised.

While factors such as a diversified investment portfolio can contribute to an insurer's overall financial stability, and high wages for employees or a large advertising budget might support operational aspects, they are not the primary metrics for assessing safety and solvency. The core issue revolves around the insurer’s capability to protect its policyholders financially, which is directly related to the adequacy of their reserves.