What is liquidity risk in insurance business ?

Liquidity risk is the risk that an insurance company will become unable to assure itself of adequate funding due to a decline in new premium income caused by a deterioration, etc. can result in a run-on-the-bank situation where large numbers of customers may leave, forcing the company to sell assets (potentially at a loss) to cover surrender value payments. The insurance industry, in general, is less vulnerable to liquidity risk than other financial sectors such as commercial banks.