The insurance industry created the PACICC in 1988 as a consumer-protection measure to deal with insurers that fail.
PACICC is a private-sector organization not empowered to resolve financial difficulties before failure and does not receive any federal government financial support or guarantee, unlike the Canada Deposit Insurance Corporation (CDIC).
In particular: PACICC is limited in its experience in dealing with companies in financial difficulty.
As well, PACICC s need to pay current claims over a short time horizon leads to material pressures on other companies, a liquidity event that becomes a solvency problem.
As a result, PACICC has not pursued remedial measures that might be lower cost and have less systemic impact.
Also, PACICC is limited in providing emergency funds for a company in financial difficulty where that might be a lower-cost option than liquidation (the same way that the CDIC can provide guarantees for deposit-taking institutions in financial difficulty).