Yunzhi Lin

The Australian National University

Abstract：

HIH Insurance was one of Australia’s largest general insurance companies, yet it ultimately succumbed to collapse. This study delves into the complex interplay between internal governance failures and external regulatory shortcomings that precipitated its downfall. The key contributing factors encompass chronic under-reserving, deteriorating underwriting standards, overreliance on intangible assets, strategic missteps in international expansion, and systemic profitability issues. We have meticulously summarized the events leading up to the collapse, particularly highlighting several failed expansion attempts. Through a detailed analysis, we identify five critical issues of HIH: under-provision, poor underwriting, dependence on intangible assets, lack of a long-term plan, and poor profitability. Additionally, we examine the evolving environment and its profound impact on the insurance sector. This article concludes by offering targeted recommendations for both insurance companies and regulators to mitigate the risks of similar future failures.

Key Words：

HIH Insurance; collapse; under-provision; underwriting