What is the term used to describe the financial stability of an insurer to meet its liabilities?

The term that describes the financial stability of an insurer to meet its liabilities is "solvency." Solvency refers to the ability of an insurance company to cover its financial obligations, including claims and premiums. An insurer that is solvent possesses sufficient assets to pay off its debts as they come due, reflecting its overall financial health.

In the context of insurance, maintaining solvency is crucial as it instills confidence among policyholders and regulators that the insurer can fulfill its contractual obligations. Regulators closely monitor the solvency of insurers to protect consumers and ensure that policyholders' claims will be paid.

While subrogation pertains to the process of seeking reimbursement from a third party responsible for a loss, compliance involves adhering to regulatory standards and guidelines. Underwriting, on the other hand, is the process of evaluating risk and determining the terms of coverage for insurance policies. These terms, while important in their own right, do not specifically refer to an insurer's ability to manage financial obligations as solvency does.