Final answer:
The method of assessing the solvency of multistate insurers coordinated by the NAIC is called a solvency review. These reviews serve to ensure that insurance providers can meet their financial obligations and maintain the necessary reserves to cover claims, critical for consumer protection and trust in the insurance industry.
Step-by-step explanation:
The primary method of ensuring the solvency of insurers, particularly those that operate on a multistate basis, involves a systematic review by the National Association of Insurance Commissioners (NAIC). This review is known as a solvency review. The main answer to the student's question is option 1) Solvency review. The goal of this periodic examination, which occurs every three to five years, is to assess the financial stability and regulatory compliance of insurance providers.Such reviews are fundamentally designed to protect policyholders by ensuring that insurance companies have enough financial reserves to cover the claims. They are part of a larger regulatory framework aimed at maintaining market stability and consumer trust in the insurance sector. Through these reviews, state regulators collaborate and coordinate through the NAIC to set standards and best practices, ensuring that insurance remains both affordable and accessible to the public, which is a delicate balance of priorities that can be influenced by political factors.This NAIC review procedure underscores the collaborative effort of state regulators in the oversight process and highlights the unique, state-based approach to insurance regulation in the United States.