TORONTO, ON — The CEO of Canada’s Property and Casualty Insurance Compensation Corporation (PACICC), Alister Campbell, today announced the release of the Second Edition of that organization’s Global Failed Insurer Catalogue (GFIC).  The new edition now records an astonishing 568 insurers that have failed in 57 different jurisdictions – just since the year 2000.  “This landmark research initiative, led by PACICC Chief Economist Grant Kelly and Research Associate Judy (Zhe) Peng, provides us with compelling evidence regarding the continued risk of insurer failure – in both developing as well as developed economies,” said Campbell.  “The evidence is clear.  Notwithstanding significant improvements in supervisory regimes overseeing the insurance sector around the world, insurer failures still happen.”

Author Kelly warns that the updated study reveals that clusters of insurer failures often occur after a significant period of calm.  “It is critical never to assume that, because an insurer has not recently failed in your home jurisdiction, it never will,” he warns.  “Our research identified seven jurisdictions that had their periods of calm interrupted by 13 new failures…in just the past 12 months.  It should serve to remind all stakeholders in the financial services sector of the risks of complacency.”

Later this year, the International Association of Insurance Supervisors (IAIS) will hold its Annual General Meeting in Cape Town.  Says Campbell, “While the IAIS continues to develop standards for best practice in supervisory regimes, it has not yet embedded an expectation regarding the existence of policyholder protection mechanisms within its core standards.  With the recent and very welcome affirmation by IAIS of the desire to increase its customer focus/orientation, we sincerely hope that it takes notice of the reality of insurer failure, illustrated so powerfully in our Catalogue.  Insurance guarantee mechanisms exist in numerous countries around the world.  But not everywhere.  This Catalogue clearly shows that insurers can fail anywhere and anytime.  We urge the IAIS to pay close attention to this study in its deliberations regarding the merits of insurance guarantee/policyholder protection mechanisms as a core component of an effective financial services safety net.”

Global Failed Insurer Catalogue (Second Edition) ‒ Key Research Findings:

  • Our research has identified 568 insurers that have failed in 57 separate jurisdictions worldwide since 2000
  • 13 new failures have been identified in this updated edition – in seven different jurisdictions
  • The average number of failed insurers per year has remained relatively stable since 2005 (about 18-20 per year)
  • Our Catalogue lists 386 P&C insurers, 153 Life insurers, 21 Composite insurers (selling both P&C and Life policies) and eight Reinsurers that have failed since 2000

Copies of all Why Insurers Fail studies are available on the PACICC website (pacicc.ca).

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PACICC is the industry-funded, non-profit resolution authority for Canada’s Property and Casualty (P&C) insurance industry. PACICC’s mission is to protect eligible policyholders from undue financial loss in the event that a Member Insurer becomes insolvent. The Corporation works to minimize the costs of insurer insolvencies and seeks to maintain a high level of consumer and business confidence in Canada’s P&C insurance industry through the financial protection that it provides to policyholders.