Financial Failure Hits 40 Insurance Companies

Results released from Weiss Ratings Inc.indicate that, even with a recession, only 40 insurance companies failed in 2001, a modest 5 percent gain over the 38 failures recorded in 2000. However, according to a Business Wire report, property and casualty insurers represented a disproportionate 34 of the 40 insurance company failures, with the Reliance Group’s insolvency alone representing 12 of the property/casualty company failures.

Conversely, the number of HMO failures dropped for the second straight year, falling 58 percent to 8 in 2001, from 19 in 2000.

Among the 48 insurance companies and HMOs that did not survive in 2001, Weiss had handed out financial safety ratings on 36, with 92 percent of those given weak or lower ratings. The leftover 8 percent had been given a fair rating.