How often must the director conduct a financial examination of every licensed insurer in the state?

The correct answer is that the director must conduct a financial examination of every licensed insurer in the state at least once every five years. This requirement is in place to ensure that insurers maintain a sound financial position and comply with state regulations. Regular examinations help protect policyholders by assessing the financial health of insurance companies, ensuring they can meet their obligations.

Conducting these examinations at least every five years balances the need for oversight with the practicalities of regulatory resources. It allows regulators to monitor the financial stability of insurers without overwhelming them with excessive examinations. This periodic review is critical in maintaining trust in the insurance market and safeguarding consumer interests.

Other frequencies, such as annually or every three years, may be too frequent given the available resources and the need to allow insurers time to adjust to feedback from examinations. Conversely, examining insurers every ten years might not provide timely insights into their financial solvency, potentially putting policyholders at risk. Thus, the five-year interval represents a sensible compromise between oversight and operational efficiency.