IDEAS home Printed from
MyIDEAS: Login to save this article or follow this journal

Why Insurers Fail: The Dynamics of Property and Casualty Insurance Insolvency in Canada

  • Darrell Leadbetter


    (Property & Casualty Insurance Compensation Corporation (PACICC), Research, 20 Richmond St. East, Suite 210, Toronto, ON, Canada M5C 2R9.)

  • Suela Dibra


    (Insurance Bureau of Canada, Policy, 777 Bay Street, Suite 2400, PO Box 121, Toronto, ON, Canada M5G 2C8.)

Registered author(s):

    We analyze the involuntary exit of 35 property and casualty insurance companies from the Canadian insurance market over the 1960–2005 period, and consistent with other jurisdictions, find evidence that inadequate pricing and deficient loss reserves are the leading cause of insurer insolvency. Overall, we find that the operating environment generally provides the catalyst for insolvency, either through turbulent financial markets or reduced profitability in the industry, but most causes of involuntary exit can however be linked back to three sources within an institution: the quality and experience of governance/management, internal operational processes and risk appetite. Further, other than inadequate pricing, our results, when compared with the few studies in various jurisdictions, indicate there are few universal causes of involuntary exit across jurisdictions, and hence supervisory approaches to insurer insolvency should be flexible and adaptable to the environment. The Geneva Papers (2008) 33, 464–488. doi:10.1057/gpp.2008.14

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL:
    File Function: Link to full text PDF
    Download Restriction: Access to full text is restricted to subscribers.

    File URL:
    File Function: Link to full text HTML
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Article provided by Palgrave Macmillan in its journal The Geneva Papers on Risk and Insurance Issues and Practice.

    Volume (Year): 33 (2008)
    Issue (Month): 3 (July)
    Pages: 464-488

    in new window

    Handle: RePEc:pal:gpprii:v:33:y:2008:i:3:p:464-488
    Contact details of provider: Web page:

    Order Information: Postal: Palgrave Macmillan Journals, Subscription Department, Houndmills, Basingstoke, Hampshire RG21 6XS, UK
    Web: Email:

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:pal:gpprii:v:33:y:2008:i:3:p:464-488. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Daniel Foley)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.