Final answer:
Regulatory intervention and supervision are key strategies a Commissioner can use to manage potentially troubled insurers, including requiring changes in financial behavior or forcing a sale or closure.
Step-by-step explanation:
An administrative strategy that a Commissioner may utilize when an insurer is potentially financially troubled includes rigorous supervision of the insurer's financial health. Supervisors may require insurers with low net worth or those making a high proportion of risky underwritings to change their behavior to avoid insolvency. In severe cases, regulatory intervention might involve forcing the insurer to be closed or sold to a financially healthy insurer.
This approach is similar to the supervision of bank-like institutions, where regulators keep a close watch on the fiscal health of these entities. Actions taken to prevent adverse selection in insurance markets also play a role, as the market itself can force companies to address risks. An insurer must sometimes separate buyers into accurate risk groups and adjust premiums accordingly or face the prospect of having only high-risk individuals seek insurance, which could damage financial stability.