PACICC's 1,273 failures arrive in bursts after calm stretches

PACICC's fourth Global Failed Insurer Catalogue counts 1,273 insurer failures across 98 countries since 2000, and 522 of them — 41.0% of the global total — are American; underneath that headline count is the catalogue's main finding: the failures arrived in bursts. Russia's 117 is the only other national tally in triple digits, and Insurance Business America, which reported the release, notes the US figure runs roughly ten times higher than any other country apart from Russia.

That burst pattern is why the report is careful with the absolute number: a market with more active carriers than any other will produce more failures in absolute terms, and by insolvency rate — failures against total insurers — the US ranks below several OECD peers, with Mexico, Greece, South Korea and Spain all posting higher averages between 2000 and 2024. Regulation, though, is state-level, so the catalogue's jurisdictional cut is the one that matters: Florida's 58 failures rank second in the world behind only Russia's, New York's 51 rank third, and Texas (46) and Illinois (32) put four US states inside the ten jurisdictions with the most recorded insurer failures.

Both Florida and New York sit in the catalogue's top tier of jurisdictions where failures are, in its phrasing, “an expected part of the market,” each recording at least one failure in more than 80% of years since 2000 — a frequency that should retire the habit of reading a quiet decade as proof of a strong regime. Lead author Kelly points to bursts rather than steady failure rates as the dominant global pattern: 118 such bursts across 59 jurisdictions since 2000, arriving “often after sustained periods of relative calm,” with more than 65% of all global failures occurring inside those bursts. Florida illustrates the pattern with 18 failures between 2005 and 2010 and 15 more between 2011 and 2014, while California packed 16 into 2000 through 2003. PACICC chief executive Alister Campbell calls the research “compelling evidence regarding the continuing risk of insurer failure, in both developing as well as developed economies”; Kelly frames the same result as “a sobering reminder to all financial services sector stakeholders of the risks of complacency.”

Bursts have teeth for capital policy because they argue against calibrating solvency regimes to average experience: an RBC formula fitted to the mean will look comfortable through exactly the calm stretch in which the next burst accumulates. The NAIC's move from triage to structural text — the RBC preamble rewrite and the narrowed SVO gap lists that, as this publication has argued, amount to a widening solvency perimeter — is the right direction for that reason. The report also credits North America's state-by-state guaranty structure, NCIGF for property-casualty and NOLHGA for life and health, as the mechanism standing behind the count. What none of it prices is timing, which is why the next edition's five-year windows will say more than its headline total: if the pattern holds, the jurisdictions to watch are the quiet ones.