Why does Connecticut mandate insurers to keep a minimum level of assets?

Connecticut mandates insurers to maintain a minimum level of assets primarily to demonstrate insurer solvency. This requirement ensures that an insurance company has sufficient financial resources to meet its policyholder obligations, such as paying claims and covering operational costs. By mandating a minimum asset level, regulators aim to protect consumers and maintain trust in the insurance market, ensuring that companies can fulfill their commitments even in times of financial strain or unexpected claims.

In the insurance industry, solvency is a crucial factor, as it directly impacts the ability of an insurer to operate effectively and pay out claims. A strong capital position is essential for managing risks associated with underwriting, investments, and other business operations. By enforcing these asset requirements, Connecticut helps mitigate the risk of insurer insolvency, ultimately benefiting consumers who rely on these companies for coverage and peace of mind.