The property and casualty industry’s insolvency trend continued into last year, with 30 p/c insurers declaring bankruptcy in 2001, according to A.M. Best. That figure mirrors the number of insolvencies in 2000, which represented a sharp rise over the seven insolvencies reported in 1999.
Inadequate reserves, improper pricing, and unsustainable growth levels were the most significant causes of the 2001 insolvencies, according to Best. Of the 30 insurers, 23, or 77 percent, became insolvent due to deficient loss reserves. Historically, the insolvency rate from insufficient reserves ranged from 30 to 35 percent, Best noted.
Best expects the rate of p/c insolvencies to remain brisk for at least the next one to two years. So far this year, Legion Insurance Group and Highlands Insurance Group have come under some form of regulatory control,
