The Main Reason for HIH Insurance Limited Collapsing

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There are few surprises when it comes to insurance, but when they do come they nearly always bring bad news. Such was the demise of HIH Insurance Limited (HIH): both a surprise (to many) and very bad news for many policyholders. This was the largest failure in Australian business history. Royal commission was appointed investigate re-issue of HIH Insurance collapsed with debt estimated $5.3 billion Australian dollars. ) The reasons behind the corporate collapses were bad management, stratetgic team was fail, failed to recognise accounting abnormalities, management’s self interest, and failed to recognised business risk. The collapse of the insurance giant HIH in Australia has been mechanism for considerable changes in financial report auditing. Many of these changes focus on the presence and extent of the auditor independence. A major issue of the Auditor independence is the treats to independence are usually restrained and difficult to measure.

one of the reason that lead most corporate to failure was bad management. As the board of directors were the people who made the final decision. They only relied on the report and the assessment from the audits. the HIH system was serving self interest. The board of directors only liked to hear and read the good news therefore The management team normally was "often flying blind" they only reported the good news to the board .There was a filter information before reporting to Board of Directors and worse they would only report bad news if they could not be avoided (Gavin Nicholson ,2008) to the board of Directors. Most of the board of directors were incompetence to their jobs. some of them relied on Slee's reviews. They could have tried to understand the situation and ruled by...

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...nies HIH blame, the Age, viewed 26,April 2014
- Uk Essay HIH Insurance: The failure in corporate governance, viewed 26,April 2014
- Commonwealth of Australia 2003, The Failure of HIH Insurance , viewed 26,April 2014
- Wikipedia. (2014). HIH Insurance. Available: http://en.wikipedia.org/wiki/HIH_Insurance. Last accessed 08/05/2014.
- Atlassian Confluence . (2014). Topic 1.5 Case study - HIH Insurance Ltd. Available: https://wiki.qut.edu.au/display/GM/Topic+1.5%09Case+study+-+HIH+Insurance+Ltd. Last accessed 08/05/2014.
- GREGOR ALLAN. (2002). THE HIH COLLAPSE: A COSTLY CATALYST FOR REFORM. DEAKIN LAW REVIEW. 11 (2), 138-159.

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