The problem of solvency is, in fact, as old as insurance. The history of
the industry knows many ways to meet the risks involved with
underwriting, such as spreading the risk portfolio (Cato, Senior already
applied it), risk selection, reserve funds, reinsurance, etc. Whilst
these measures too often proved ineffective, the establish- ment of
legislative control and public supervision ensued. However, not until
the last few decades has the solvency issue become an ob- ject of
intensive studies, very much thanks to the progress of related empirical
and theoretical knowledge, and in the under- standing of the concerned
complicated processes. The research activities have grown extensively in
many countries in recent years. The more the studies advance the more
new relevant aspects are detected and a great variety of alternative
proposals have come up for discussion. Therefore, it has become
necessary to attempt a survey of the whole problem area in order to be
able to place the quite numerous pieces of knowledge in their proper
context, and also, among other things, to avoid the pitfalls of handling
isolated problems omitting vital tie-ins to the environment. Many of the
rele- vant problems and subproblems are still lacking adequate and well
tested solutions. Therefore, a survey of the whole problem area can also
hopefully serve as guidance for future research efforts.