Solvency describes an insurer's ability to meet its obligations, taking account of its assets, liabilities, and financial risks. Regulatory solvency frameworks impose requirements intended to support that ability. Solvency is related to, but different from, short-term liquidity and the cash needed for immediate payments.
A Nepalese customer can consider regulatory information and reliable financial reporting when evaluating an insurer, alongside product suitability. A low premium or high advertised bonus does not establish financial strength. The Nepal Insurance Authority supervises the local commercial insurance sector, while international solvency approaches can differ from Nepal's requirements.