INTRODUCTION 
Insurance affects everything and everything affects insurance. It is generally understood that insurance allows those who participate in the economy to produce goods and services without the paralyzing fear that some adverse incident could leave them destitute or unable to function. However, few people are aware of the extraordinary impact the industry has on state, local and national economies.

This report covers ways in which both property/casualty and life insurance contribute to our economy far beyond their core function of helping to manage risk.

Property/casualty (auto, home and commercial) insurance allows those who are the victims of accidental loss to recover financially through the payment of claims for property damage and injury. When property/casualty insurance claims are paid, funds are transferred to local businesses in the form of payment for goods or services. Among those that receive the most revenue are auto repair shops, building contractors and the health care community.

Life insurance helps households manage their finances in the face of death and disability by minimizing disruption to a wage earner’s dependents. Annuities reduce the likelihood that a retiree will run out of money. By providing a measure of financial security to individuals, life insurance products help stabilize the economy.

Insurance companies also contribute to the economy through their investments. As part of the financial services industry, insurers act as financial intermediaries, investing the funds they collect for providing insurance protection. Total assets of property/casualty insurers totaled $1.483 trillion in 2006. Cash and invested assets were $1.229 trillion, or 83 percent. Life/health insurer total assets totaled $4.723 trillion in 2006. Cash and invested assets of these insurers amounted to $2.874 trillion, or 61 percent.

Insurers contribute more than $250 billion to the nation’s gross domestic product. Their taxes include special levies on insurance premiums, which amounted to almost $15 billion in 2005, or 2.3 percent of all taxes collected by the states. They are also very large employers, providing some 2.3 million jobs, or 2.1 percent of U.S. employment.

This publication shows the myriad ways in which insurance supports the economy. Each chart illustrates one or more element. Together they tell a tale that is rarely told—that insurance helps provide the firm foundation for a functioning economy.

Robert P. Hartwig,
President
Insurance Information Institute