Property and casualty insurers have a greater need for liquidity than life insurers.

Question

Quizplus · Accepted Answer

Property and casualty insurers face the risk of large and unexpected losses, such as from natural disasters or liability claims, which require immediate payment of claims. Thus, they need to have sufficient liquid assets on hand to pay claims as they arise. In contrast, life insurers typically have a more predictable cash flow as claims are paid out over a longer period of time and can therefore manage their liquidity needs differently.

Property and Casualty Insurers Have a Greater Need for Liquidity