The need for scrutiny also inheres in the nature of the insurance. The human impulse for security is nearly universal. Individuals, groups and business entities are exposed to an infinite number of perils such as property loss due to fire, inadequate financial resources for loved ones due to premature death, accidents and illnesses, loss of earning power due to disability, etc. In the absence of some adequate system of security, both individual and societal catastrophes would be commonplace.

Although one may not be able to predict with certainty nor avoid such losses, it is possible to alleviate their adverse financial effects through insurance.

In order for the substantial losses of the few to be compensated, an insurer must be able to (a) accumulate an adequate and vast amount of capital from the relatively small premium payments of the many and (b) hold and grow through investments such capital to assure that funds are available to meet their obligations to the insured when the insured event occurs.

The insured builds up an "equity" in the insurer’s promise to perform in the future, sometimes the distant future. The vital public need for security demands assurance of insurer capacity (continuing solvency) and willingness to perform on its promises. This need demands regulatory scrutiny.