Death spiral

A death spiral, in insurance jargon, is one way for an insurance model to fail.

Insurance depends on a "risk pool" having a preponderance of "good risks," who are not likely to file a claim. But if all or most insured persons are likely to file claims, the insurer must raise premiums to cover those claims. That will makie insurance less attractive, so even fewer "good risks" take out policies. Insurers raise premiums further, and the cycle continues.

Finally, only the "bad risks" have policies. Even they cannot afford the premiums. Result: the insurer must either fold, or stop offering this kind of insurance.