Alister Campbell (pictured), chief executive of Canada’s Property and Casualty Insurance Compensation Corporation (PACICC), has announced the release of the second edition of its Global Failed Insurer Catalogue (GFIC), a comprehensive report detailing the failure of 568 insurers across 57 jurisdictions since 2000.
The new edition highlights the ongoing risks facing the global insurance sector, with Campbell noting that despite improvements in regulatory oversight, insurer failures remain a significant concern.
“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,” Campbell stated.
The updated research shows a concerning pattern where clusters of failures follow periods of relative stability. Kelly cautioned that stakeholders should remain vigilant, regardless of recent history in their respective markets.
“It is critical never to assume that, because an insurer has not recently failed in your home jurisdiction, it never will,” Kelly said, highlighting that seven jurisdictions have experienced 13 new insurer failures over the past year alone. “It should serve to remind all stakeholders in the financial services sector of the risks of complacency.”
The ongoing risk will likely be a key topic at the upcoming International Association of Insurance Supervisors (IAIS) annual general meeting in Cape Town later this year. Campbell expressed hope that the IAIS will take note of the GFIC findings.
“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,” Campbell noted, urging the association to give serious consideration to the report and to prioritise policyholder protection mechanisms as part of a comprehensive financial safety net.
Insurance guarantee mechanisms, which can protect policyholders when an insurer fails, are present in some countries but not universally adopted. Campbell stressed that the catalogue indicates the potential for insurer failures in any market, and he encouraged global regulators to act accordingly.
“This catalogue clearly shows that insurers can fail anywhere and anytime,” he said.
According to the GFIC’s second edition, the annual rate of failures has remained steady, with an average of 18 to 20 insurers collapsing per year since 2005. The breakdown of failures includes 386 property & casualty insurers, 153 life insurers, 21 composite insurers (selling both life and P&C policies), and eight reinsurers.
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