What is a key indicator that may suggest continued operation of an insurer is hazardous?

A key indicator that may suggest the continued operation of an insurer is hazardous is adverse findings in financial reports. Financial reports provide crucial insights into the financial health of an insurer. When these reports reveal adverse findings, such as declining revenues, increased losses, or insufficient reserves, it can indicate underlying problems that may threaten the insurer's stability and ability to meet its obligations to policyholders.

Monitoring financial reports is essential for regulators, stakeholders, and consumers, as it helps identify potential risks that could lead to insolvency or operational difficulties. In contrast, effective communication with policyholders, high levels of reinsurance, and stable cash flow are generally indicators of a well-performing insurer. These factors suggest effectiveness in managing customer relations, risk exposure, and financial stability, respectively. Thus, adverse findings in financial reports stand out as a critical warning sign that should not be overlooked.