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| − | '''Reading''': “Guide to Compensation Plan for Property and Casualty Insurers,” May 2010.
| + | {| class='wikitable' style='background-color: lightblue;" |
| − | * Click for ''[http://www.pacicc.ca/industry-information/coverage/ updated coverage and limit]''.
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| − | | |
| − | '''Authour''': Property and Casualty Insurance Compensation Corporation (PACICC)
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| − | | |
| − | [https://www.battleactsmain.ca/vanillaforum/categories/pacicc-comp<span style="font-size: 12px; background-color: lightgrey; border: solid; border-width: 1px; border-radius: 10px; padding: 2px 10px 2px 10px; margin: 0px;">'''Forum'''</span>]
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| − | | |
| − | {| class='wikitable' style='background-color: navajowhite; | |
| | |- | | |- |
| − | || '''BA Quick-Summary''': <span style="color: green;>'''Compensation After Insolvency'''</span> | + | || <span style="font-size: 18px;">'''MODIFIED for 2024-Spring:''' |
| − | | + | * Updates to this wiki article are in progress but are likely not material. Please check back later. |
| − | * PACICC stands for ''Property And Casualty Insurance Compensation Corporation''. The purpose of PACICC is to provide compensation AFTER insolvency ''(whereas the purpose of OSFI is to PREVENT insolvencies.)'' | + | * You can begin studying and any material changes will be noted in the Study Tips section of this wiki article.</span> |
| − | * You need to know how to calculate the compensation a policyholder receives when their insurer goes bankrupt. Variations of that question have appeared on the exam several times on available published exams. | |
| − | | |
| | |} | | |} |
| − |
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| − | ==Pop Quiz==
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| − |
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| − | List 4 <u>internal</u> causes of insurer insolvency. [Hint: <span style="color: red;">'''GoNGS'''</span>.]
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| − |
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| − | ==BattleTable==
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| − |
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| − | Based on past exams, the '''main things''' you need to know ''(in rough order of importance)'' are:
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| − | * <span style='color: green;'>'''calculate compensation'''</span> to policyholder after insurer goes insolvent
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| − | * calculate <u>assessment</u> on insurer ''(for funding of PACICC)''
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| − | * miscellaneous facts about PACICC: <u>purpose</u>, <u>procedures</u>, <u>trigger</u> for financial responsibility
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| − |
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| − | Calculating PACICC compensation to the policyholder in the event of an insolvency was a popular question up through '''2015.Spring''', but not so much recently. ''Did the exam committee decided it wasn't important?'' Still, it's pretty easy. Don't skip it!
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| − |
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| − | [https://battleactsmain.ca/FC.php?selectString=**&filter=both&sortOrder=natural&colorFlag=allFlag&colorStatus=allStatus&priority=&prefix=PACICC&suffix=Comp§ion=all&subSection=all&subsetFlag=TopQReading&examRep=all&examYear=all&examTerm=all&quizNum=0&select07=0&select08=0&select09=0<span style="font-size: 20px; background-color: gold; border: solid; border-width: 1px; border-radius: 10px; padding: 2px 10px 2px 10px; margin: 10px;">'''Top Questions]'''</span> <span style="color: red;">''← Questions you <u>absolutely</u> need to know!'' </span>
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| − | {| class='wikitable'
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| − | |-
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| − | | Questions held out from Fall 2019 exam: '''#10'''. ''(Skip these now to have a fresh exam to practice on later. For links to these questions, see [[Exam Summaries]].)''
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| − | |}
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| − | : {| class='wikitable' style='width: 1000px;'
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| − | ! style='width: 175px;' | reference !! style='width: 175px;' | part (a) !! style='width: 175px;' | part (b) !! style='width: 175px;' | part (c) !! part (d)
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| − | |-
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| − | || [https://www.battleactsmain.ca/pdf/Exam_(2019_1-Spring)/(2019_1-Spring)_(10)_v2.pdf <span style='font-size: 12px; background-color: yellow; border: solid; border-width: 1px; border-radius: 5px; padding: 2px 5px 2px 5px; margin: 5px;'>E</span>] <span style="color: red;">'''(2019.Spring #10)'''</span>
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| − | || [[CAS.GovtIns]]
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| − | || '''(i)''' evaluate PACICC <br> '''(ii)''' [[IBC.Flood]]
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| − | | style="background-color: lightgrey;" |
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| − | | style="background-color: lightgrey;" |
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| − |
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| − | |-
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| − | || [https://www.battleactsmain.ca/pdf/Exam_(2019_1-Spring)/(2019_1-Spring)_(12)_v2.pdf <span style='font-size: 12px; background-color: yellow; border: solid; border-width: 1px; border-radius: 5px; padding: 2px 5px 2px 5px; margin: 5px;'>E</span>] <span style="color: red;">'''(2019.Spring #12)'''</span>
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| − | || <span style='color: green;'>'''calculate compensation'''</span> <span style="color: red;"><sup>'''1'''</sup></span>
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| − | || <span style='color: green;'>'''calculate compensation'''</span>
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| − | || '''PACICC funding''': <br> - methods
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| − | | style="background-color: lightgrey;" |
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| − |
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| − | |-
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| − | || [https://www.battleactsmain.ca/pdf/Exam_(2018_2-Fall)/(2018_2-Fall)_(13).pdf <span style='font-size: 12px; background-color: yellow; border: solid; border-width: 1px; border-radius: 5px; padding: 2px 5px 2px 5px; margin: 5px;'>E</span>] <span style='color: red;'>'''(2018.Fall #13)'''</span>
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| − | || [[Dibra.Fail]]
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| − | || <span style='color: green;'>'''calculate compensation'''</span>
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| − | | style="background-color: lightgrey" | <br> <br>
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| − | | style="background-color: lightgrey" |
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| − |
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| − | |-
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| − | || [https://www.battleactsmain.ca/pdf/Exam_(2017_2-Fall)/(2017_2-Fall)_(12).pdf <span style='font-size: 12px; background-color: yellow; border: solid; border-width: 1px; border-radius: 5px; padding: 2px 5px 2px 5px; margin: 5px;'>E</span>] <span style='color: red;'>'''(2017.Fall #12)'''</span>
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| − | || '''purpose''': <br> - of PACICC
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| − | || '''procedures''': <br> - of PACICC
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| − | || see [[Dibra.Fail]]
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| − | | style="background-color: lightgrey" |
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| − |
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| − | |-
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| − | || [https://www.battleactsmain.ca/pdf/Exam_(2016_2-Fall)/(2016_2-Fall)_(01).pdf <span style='font-size: 12px; background-color: yellow; border: solid; border-width: 1px; border-radius: 5px; padding: 2px 5px 2px 5px; margin: 5px;'>E</span>] <span style='color: red;'>'''(2016.Fall #1)'''</span>
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| − | || '''purpose''': <br> - of OSFI
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| − | || See [[McD.Intro]]
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| − | | style="background-color: lightgrey" |
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| − | | style="background-color: lightgrey" |
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| − |
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| − | |-
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| − | || [https://www.battleactsmain.ca/pdf/Exam_(2015_1-Spring)/(2015_1-Spring)_(13).pdf <span style='font-size: 12px; background-color: yellow; border: solid; border-width: 1px; border-radius: 5px; padding: 2px 5px 2px 5px; margin: 5px;'>E</span>] <span style='color: red;'>'''(2015.Spring #13)'''</span>
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| − | || <span style='color: green;'>'''calculate compensation'''</span>
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| − | | style="background-color: lightgrey" | <br> <br>
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| − | | style="background-color: lightgrey" |
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| − | | style="background-color: lightgrey" |
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| − |
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| − | |-
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| − | || [https://www.battleactsmain.ca/pdf/Exam_(2014_2-Fall)/(2014_2-Fall)_(11).pdf <span style='font-size: 12px; background-color: yellow; border: solid; border-width: 1px; border-radius: 5px; padding: 2px 5px 2px 5px; margin: 5px;'>E</span>] <span style='color: red;'>'''(2014.Fall #11)'''</span>
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| − | || '''costs''': <br> - involuntary exits
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| − | || <span style='color: green;'>'''calculate compensation'''</span>
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| − | | style="background-color: lightgrey" |
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| − | | style="background-color: lightgrey" |
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| − |
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| − | |-
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| − | || [https://www.battleactsmain.ca/pdf/Exam_(2014_1-Spring)/(2014_1-Spring)_(08).pdf <span style='font-size: 12px; background-color: yellow; border: solid; border-width: 1px; border-radius: 5px; padding: 2px 5px 2px 5px; margin: 5px;'>E</span>] <span style='color: red;'>'''(2014.Spring #8)'''</span>
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| − | || '''PACICC assessment''': <br> - formula
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| − | | style="background-color: lightgrey" |
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| − | | style="background-color: lightgrey" |
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| − | | style="background-color: lightgrey" |
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| − |
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| − | |-
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| − | || [https://www.battleactsmain.ca/pdf/Exam_(2013_2-Fall)/(2013_2-Fall)_(11).pdf <span style='font-size: 12px; background-color: yellow; border: solid; border-width: 1px; border-radius: 5px; padding: 2px 5px 2px 5px; margin: 5px;'>E</span>] <span style='color: red;'>'''(2013.Fall #11)'''</span>
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| − | || <span style='color: green;'>'''calculate compensation'''</span>
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| − | || <span style='color: green;'>'''calculate compensation'''</span>
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| − | || '''trigger''': <br> - PACICC responsibility
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| − | | style="background-color: lightgrey" |
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| − |
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| − | |-
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| − | || [https://www.battleactsmain.ca/pdf/Exam_(2012_2-Fall)/(2012_2-Fall)_(17).pdf <span style='font-size: 12px; background-color: yellow; border: solid; border-width: 1px; border-radius: 5px; padding: 2px 5px 2px 5px; margin: 5px;'>E</span>] <span style='color: red;'>'''(2012.Fall #17)'''</span>
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| − | || '''SCENARIO''': <br> - soundness of PACICC
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| − | || see [[Dibra.Fail]]
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| − | | style="background-color: lightgrey" |
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| − | | style="background-color: lightgrey" |
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| − |
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| − | |-
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| − | || [https://www.battleactsmain.ca/pdf/Exam_(2012_2-Fall)/(2012_2-Fall)_(20).pdf <span style='font-size: 12px; background-color: yellow; border: solid; border-width: 1px; border-radius: 5px; padding: 2px 5px 2px 5px; margin: 5px;'>E</span>] <span style='color: red;'>'''(2012.Fall #20)'''</span>
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| − | || <span style='color: green;'>'''calculate compensation'''</span>
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| − | || <span style='color: green;'>'''calculate compensation'''</span>
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| − | | style="background-color: lightgrey" | <br> <br>
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| − | | style="background-color: lightgrey" |
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| − |
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| − | |}
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| − |
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| − | : <span style="color: red;"><sup>'''1'''</sup></span> Parts (a) and (b) of this question are defective. The loss amount was not provided and you could not solve the problem without it. You had to make an assumption regarding the loss amount and the examiner's report accepted any assumption.
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| − |
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| − | ==In Plain English!==
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| − |
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| − | ===Intro and Basic Facts===
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| − |
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| − | PACICC stands for Property and Casualty Insurance Compensation Corporation.
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| − |
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| − | :{| class="wikitable"
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| − | |-
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| − | | The '''purpose''' of PACICC is to provide a reasonable level of '''policy holder recovery''' for claims & unearned premium AFTER an insurer becomes insolvent.
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| − | |}
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| − |
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| − | This policyholder recovery 'plan' is administered by the non-profit PACICC. <u>Members</u> of PACICC include all participating insurers in a jursidiction, with some exceptions. ''('''Ex''': reinsurers.)'' Note that a <u>participating</u> insurer is simply a licensed insurer selling a class of business covered by PACICC. PACICC involvement is <u>triggered</u> by the issuance of a formal winding up order. This is all pretty easy, right! Just a couple of more basic facts before look at the actual calculations:
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| − |
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| − | :{| class="wikitable"
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| − | |-
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| − | | '''Question''': identify the <u>types</u> of policies covered by PACICC
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| − | |}
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| − |
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| − | :* <u>most</u> P&C policies are covered by PACICC ''(life insurance have their own similar plan so these are excluded)''
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| − | :* '''exclusions''':
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| − | ::: - mandatory auto coverage sold in BC, Saskatchewan, and Manitoba <span style="color: red;">'''(added Feb 23, 2023)'''
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| − | ::: - aircraft, credit, crop
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| − | ::: - directors' and officers', employer's liability, certain errors and omissions <span style="color: green;">'''''(medical malpractice is <u>not</u> excluded)'''''</span>
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| − | ::: - fidelity, financial guarantee, marine, mortgage, surety and title insurance
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| − | ::: - auto insurance in MB & SK ''(auto insurance is provided by Crown Corporations, not private insurers)''
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| − | ::: - BI in Quebec when covered by Société d'assurance automobile
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| − |
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| − | This is a long list of exclusions and I don't think you need to memorize it. Virtually all of the old exam problems involve '''auto''' or '''property'''. If you read this list once or twice and just remember that most of the exclusions are ''unusual'' policy types you should be ok. Note that some types of auto policies <u>are</u> excluded however, namely mandatory auto coverage sold in BC, Saskatchewan, and Manitoba.
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| − |
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| − | An exam question may try to trick you by asking you to calculate the compensation for an aircraft policy. You would have to remember that aircraft is an ''unusual'' policy that isn't covered by PACICC. The compensation would therefore be 0.
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| − |
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| − | [https://battleactsmain.ca/FC.php?selectString=**&filter=both&sortOrder=natural&colorFlag=allFlag&colorStatus=allStatus&priority=importance-high&subsetFlag=miniQuiz&prefix=PACICC&suffix=Comp§ion=all&subSection=all&examRep=all&examYear=all&examTerm=all&quizNum=1<span style="font-size: 20px; background-color: aqua; border: solid; border-width: 1px; border-radius: 10px; padding: 2px 10px 2px 10px; margin: 10px;">'''mini BattleQuiz 1]'''</span> <span style="color: red;">'''You must be <u>logged in</u> or this will not work.''' </span>
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| − |
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| − | ===Explanation of 2015.Spring #13===
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| − |
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| − | There is only 1 other likely exam question on this topic:
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| − |
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| − | * calculating policy holder recovery
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| − |
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| − | And there is a good ''[https://battleactsmain.ca/vanillaforum/discussion/25/pacicc-compensation-2015-spring-13 forum discussion]'' on this particular question.
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| − |
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| − | {| class='wikitable' style='background-color: yellow;'
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| − | |-
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| − | || '''2021.Spring Update''': Change in coverage limits
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| − | |}
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| − |
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| − | * Everything is the same except the coverage limits. Exam problems from 2020.Fall and prior use the old limits. ''(Technically, these problems are now outdated because of the new lmits, but the formulas are the same.)'' Beginning 2021.Spring, the limits listed below are in effect:
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| − |
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| − | : → new limit for auto: '''$400,000''' ''(old limit was $250,000)''
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| − | : → new limit for HO: '''$500,000''' ''(old limit was $300,000)''
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| − | : → refunding of unearned premium: '''70% x $2,500''' ''(old limit was 70% x $1,000)
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| − |
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| − | As you look at these old exam problems, keep these new limits in mind.
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| − |
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| − | Let's look at: [https://www.battleactsmain.ca/pdf/Exam_(2015_1-Spring)/(2015_1-Spring)_(13).pdf <span style='font-size: 12px; background-color: yellow; border: solid; border-width: 1px; border-radius: 5px; padding: 2px 5px 2px 5px; margin: 5px;'>E</span>] <span style="color: red;">'''(2015.Spring #13)'''</span> ''(Note that the examiner's report provides 2 acceptable solutions. This is discussed in the forum [https://www.battleactsmain.ca/vanillaforum/discussion/25/pacicc-compensation-2015-spring-13 here].)''
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| − |
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| − | Given:
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| − | :{| class="wikitable"
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| − | |-
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| − | | '''unearned premium:''' || style="text-align: right" | 500
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| − | |-
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| − | | '''claim:''' || style="text-align: right" | 400,000
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| − | |-
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| − | | '''deductible: ''' || style="text-align: right" | 1,000
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| − | |-
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| − | | '''distribution from InsR:''' || style="text-align: right" | 350,000
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| − | |}
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| − |
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| − | The basic formula is easy enough:
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| − |
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| − | :{| class="wikitable"
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| − | |-
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| − | | '''recovery''' = (unearned premium component) + (indemnity component)
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| − | |}
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| − |
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| − | : Now,
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| − |
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| − | :: '''unearned premium component = ''' 70% x min(1000, unearned premium) = 70% x min(1000, 500) '''= <u>350</u>'''
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| − |
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| − | : and,
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| − |
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| − | :: '''indemnity component = ''' min( loss - distribution - deductible, 300000 ) = min( 400000 - 350000 - 1000, 300000) '''= <u>49,000</u>'''
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| − |
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| − | Therefore,
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| − |
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| − | : {| class="wikitable"
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| − | |- style="background-color: lightgreen;"
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| − | | '''recovery =''' 350 + 49,000 '''= 49,350'''
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| − | |}
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| − |
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| − | ====Complications to the Calculation====
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| − |
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| − | The value of 300,000 used in the formula for the indemnity component '''depends on''' whether the insurance policy is personal property or auto.
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| − |
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| − | : '''auto:''' use 250,000
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| − | : '''personal property:''' use 300,000
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| − |
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| − | Also, the unearned premium is not always given. You may have to calculate the unearned premium based on the policy inception date and the insurer's insolvency date.
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| − |
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| − | ====Distributions====
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| − |
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| − | The term ''distribution'' arises from time to time. This is what it means:
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| − |
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| − | * In the indemnity formula, ''distribution'' refers to money the policyholder received from the insurer. In '''2015.Spring #13''', the policyholder received a distribution of 350,000 from their insurer for their claim of 400,000. Since the policyholder still had money owed to them, they may receive another distribution ''(possibly from the liquidator of their insolvent insurer after the company is liquidated.)''
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| − |
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| − | * There is also an example in the source text discussing '''distribution from a liquidator'''. Here the policyholder received 250,000 of their 300,000 claim directly from PACICC. Now, PACICC doesn't have its own money and must recover this 250,000 from liquidating the insolvent insurer ''(or the other insurers that are still solvent, or the compensation fund)'' before the policyholder gets any more money.
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| − | :: '''Case 1''': If the liquidator makes a distribution of 150,000 ''(which just means the liquidator gives 150,000 to PACICC)'' then the insured <u>wouldn't</u> get any of it because that 150,000 doesn't cover the original 250,000.
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| − | :: '''Case 2''': If the liquidator makes a distribution of 275,000 to PACICC ''(gives 275,000 to PACICC)'' then the original 250,000 is covered and the policyholder <u>would</u> receive the leftover 25,000. The policyholder would still be 25,000 short and whether they get this back depend on whether PACICC gets any more money from its funding sources.
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| − |
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| − | [https://battleactsmain.ca/FC.php?selectString=**&filter=both&sortOrder=natural&colorFlag=allFlag&colorStatus=allStatus&priority=importance-high&subsetFlag=miniQuiz&prefix=PACICC&suffix=Comp§ion=all&subSection=all&examRep=all&examYear=all&examTerm=all&quizNum=2<span style="font-size: 20px; background-color: aqua; border: solid; border-width: 1px; border-radius: 10px; padding: 2px 10px 2px 10px; margin: 10px;">'''mini BattleQuiz 2]'''</span> <span style="color: red;">'''You must be <u>logged in</u> or this will not work.''' </span>
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| − |
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| − | ===Funding and Assessment===
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| − |
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| − | Here is a question that has appeared on more than 1 exam:
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| − |
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| − | :{| class='wikitable'
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| − | |-
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| − | || '''Question''': identify funding mechanisms for PACICC [Hint: <span style="color: red;">'''AC-3'''</span>]
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| − | |}
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| − |
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| − | :: <s><span style="color: red;">'''L'''</span>'''iquidation''' of the insolvent insurer's assets</s> <span style="color: red;">'''← The CAS no longer accepts this answer.'''</span> See ''[https://www.battleactsmain.ca/vanillaforum/discussion/1089/2019-fall-q10b#latest this forum post]'' for further details.
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| − | :: <span style="color: red;">'''A'''</span>'''ssessment''' of participating insurers
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| − | :: <span style="color: red;">'''C'''</span>'''ompensation''' fund – borrow money from this fund ''(pre-insolvency funding)''
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| − | :: <span style="color: red;">'''-'''</span>
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| − | :: <span style="color: red;">'''3'''</span>'''rd''' party recovery
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| − |
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| − | That question appeared as part (c) on the following exam, and the examiner's report listed the first 3 answers above:
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| − |
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| − | : [https://www.battleactsmain.ca/pdf/Exam_(2019_1-Spring)/(2019_1-Spring)_(12)_v2.pdf <span style='font-size: 12px; background-color: yellow; border: solid; border-width: 1px; border-radius: 5px; padding: 2px 5px 2px 5px; margin: 5px;'>E</span>] <span style="color: red;">'''(2019.Spring #12 - part c)'''</span>
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| − |
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| − | Unfortunately, this is another repeat exam question where the examiner's report from one year provides a different answer from another year. In particular, the examiner's report answer for part (b) of the following very similar exam question was somewhat different:
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| − |
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| − | : [https://www.battleactsmain.ca/pdf/Exam_(2019_2-Fall)/(2019_2-Fall)_(10).pdf <span style='font-size: 12px; background-color: yellow; border: solid; border-width: 1px; border-radius: 5px; padding: 2px 5px 2px 5px; margin: 5px;'>E</span>] <span style="color: red;">'''(2019.Fall #10 - part b)'''</span>
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| − |
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| − | You could argue that the '''2019.Fall''' question asked for more details than just sources of funding, but I still don't think it was very clear. If I had been answering that question, I probably would also have quoted the assessment formula ''(and the assessment limit of 1.5% x DWP <u>of</u> each insurer):
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| − |
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| − | : '''A = B x (C/D)'''
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| − |
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| − | where
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| − |
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| − | : A = insurer assessment
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| − | : B = total amount assessed by PACICC = (amount advanced by PACICC) minus (amount recovered)
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| − | : C = DWP of insurer
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| − | : D = total DWP of all assessed insurers
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| − |
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| − | This calculation must be done <u>separately by jurisdiction</u>. Anyway, take a look at the examiner's report answer. The details are all included in various BattleCards in quizzes 3 & 4 below.
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| − | [https://battleactsmain.ca/FC.php?selectString=**&filter=both&sortOrder=natural&colorFlag=allFlag&colorStatus=allStatus&priority=importance-high&subsetFlag=miniQuiz&prefix=PACICC&suffix=Comp§ion=all&subSection=all&examRep=all&examYear=all&examTerm=all&quizNum=3<span style="font-size: 20px; background-color: aqua; border: solid; border-width: 1px; border-radius: 10px; padding: 2px 10px 2px 10px; margin: 10px;">'''mini BattleQuiz 3]'''</span> <span style="color: red;">'''You must be <u>logged in</u> or this will not work.''' </span>
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| − | Regarding the funding mechanism of '''assessment:''' The assessment applies only to licensed, participating insurers in the jurisdiction where the insolvency occurred. There are also '''limits''' on the amount PACICC can assess and insurer, and limits on how much of the assessment the insurer would actually have to pay.
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| − | [https://battleactsmain.ca/FC.php?selectString=**&filter=both&sortOrder=natural&colorFlag=allFlag&colorStatus=allStatus&priority=importance-high&subsetFlag=miniQuiz&prefix=PACICC&suffix=Comp§ion=all&subSection=all&examRep=all&examYear=all&examTerm=all&quizNum=4<span style="font-size: 20px; background-color: aqua; border: solid; border-width: 1px; border-radius: 10px; padding: 2px 10px 2px 10px; margin: 10px;">'''mini BattleQuiz 4]'''</span> <span style="color: red;">'''You must be <u>logged in</u> or this will not work.''' </span>
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| − | ==BattleCodes==
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| − | Memorize:
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| − | * purpose of PACICC
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| − | * 4 funding mechanisms
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| − | : → Note that only 3 are now accepted by the CAS graders. See ''[[PACICC.Comp#Funding_and_Assessment | Funding and Assessment]]'' for details.
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| − | Conceptual:
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| − | * difference between OSFI's and PACICC's roles regarding insolvencies
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| − |
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| − | Calculational:
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| − | * policyholder recovery/compensation in the event of an insolvency
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| − | * ''(insurer assessment - note that this is a low probability question)''
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| − |
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| − | [https://battleactsmain.ca/FC.php?selectString=**&filter=both&sortOrder=natural&colorFlag=allFlag&colorStatus=allStatus&priority=importance-high&subsetFlag=miniQuiz&prefix=PACICC&suffix=Comp§ion=all&subSection=all&examRep=all&examYear=all&examTerm=all&quizNum=all<span style="font-size: 20px; background-color: lightgreen; border: solid; border-width: 1px; border-radius: 10px; padding: 2px 10px 2px 10px; margin: 10px;">'''Full BattleQuiz]'''</span> <span style="color: red;">'''You must be <u>logged in</u> or this will not work.''' </span>
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| − | [https://www.battleactsmain.ca/vanillaforum/categories/pacicc-comp<span style="font-size: 12px; background-color: lightgrey; border: solid; border-width: 1px; border-radius: 10px; padding: 2px 10px 2px 10px; margin: 0px;">'''Forum'''</span>]
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| − |
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| − | ==POP QUIZ ANSWERS==
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| − | 4 <u>internal</u> causes of insurer insolvency: [Hint: <span style="color: red;">'''GoNGS'''</span>] ''(See [[Dibra.Fail]])''
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| − | : <span style="color: red;">'''G'''</span>overnance & internal controls ''(<u>breakdown</u> of governance)''
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| − | : <span style="color: red;">'''N'''</span>ew entrants ''(they are <u>inexperienced</u> & subject to established competition)''
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| − | : <span style="color: red;">'''G'''</span>rowth ''(<u>rapid</u> growth produces a high proportion of new business, which usually has higher loss ratios)''
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| − | : <span style="color: red;">'''S'''</span>ize ''(insurer may be too <u>small</u> to absorb large losses)''
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