Industry Overview

Industry Overview

INSURANCE INDUSTRY AT A GLANCE

  • The U.S. insurance industry’s net premiums written totaled $1.2 trillion in 2015, with premiums recorded by life/health (L/H) insurers accounting for 55 percent and premiums by property/casualty (P/C) insurers accounting for 45 percent, according to S&P Global Market Intelligence.
  • P/C insurance consists primarily of auto, home and commercial insurance. Net premiums written for the sector totaled $519.8 billion in 2015.
  • The L/H insurance sector consists primarily of annuities and life insurance. Net premiums written for the sector totaled $635.6 billion in 2015.
  • Health insurance is generally considered separate. The sector includes private health insurance companies as well as government programs. P/C and L/H insurers also write some health insurance.
  • There were 5,926 insurance companies in 2015 in the United States (including territories), including P/C (2,544), life/annuities (872), health (859), fraternal (85), title (56), risk retention groups (239) and other companies (1,261), according to the National Association of Insurance Commissioners.
  • Insurance carriers and related activities contributed $450.3 billion, or 2.6 percent, of U.S. gross domestic product in 2014, according to the U.S. Bureau of Economic Analysis.
  • The U.S. insurance industry employed 2.5 million people in 2015, according to the U.S. Department of Labor. Of those, 1.5 million worked for insurance companies, including life and health insurers (851,100 workers), P/C insurers (599,700 workers) and reinsurers (25,100 workers). The remaining 1.1 million people worked for insurance agencies, brokers and other insurance-related enterprises.
  • Total P/C cash and invested assets were $1.5 trillion in 2015, according to S&P Global Market Intelligence. L/H cash and invested assets totaled $3.7 trillion in 2015. The total of cash and invested assets for both sectors was $5.2 trillion. The majority of these assets were in bonds (62 percent of P/C assets and 74 percent of L/H assets).
  • P/C and L/H insurance companies paid $18.1 billion in premium taxes in 2014, or $57 for every person living in the United States, according to the U.S. Department of Commerce.
  • P/C insurers paid out $15.2 billion in property losses related to catastrophes in 2015, compared with $15.5 billion in 2014 according to the Property Claims Services division of Verisk Analytics. There were 39 catastrophes in 2015, compared with 31 in 2014.

 

Property/Casualty And Life/Health Insurance Premiums, 2015 (1)

($ billions)

(1) Property/casualty: net premiums written after reinsurance transactions, excludes state funds; life/health: premiums, annuity considerations (fees for annuity contracts) and deposit-type funds.

Source: NAIC data, sourced from S&P Global Market Intelligence, Insurance Information Institute.

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Employment In Insurance, 2006-2015

(Annual averages, 000)

  Insurance carriers Insurance agencies, brokerages and related services  
  Direct insurers (1)            
Year Life and health (2) Property/
casualty
Reinsurers Total Insurance
agencies
and brokers
Other
insurance-
related
activities (3)
Total Total
industry
2006 790.6 649.1 28.0 1,467.7 662.4 249.0 911.4 2,379.1
2007 787.1 647.0 27.0 1,461.1 677.8 252.7 930.5 2,391.6
2008 800.8 646.7 27.9 1,475.4 671.6 258.1 929.6 2,405.1
2009 802.8 632.9 27.5 1,463.2 653.3 254.2 907.4 2,370.6
2010 804.1 614.3 26.8 1,445.2 642.3 253.1 895.5 2,340.6
2011 788.9 611.6 25.6 1,426.1 649.2 261.1 910.3 2,336.4
2012 811.3 599.5 25.7 1,436.4 659.6 272.3 931.8 2,368.3
2013 813.2 593.7 26.2 1,433.1 672.3 283.5 955.8 2,388.9
2014 829.0 594.7 25.1 1,448.7 720.0 297.1 1,017.1 2,465.8
2015 851.1 599.7 25.1 1,475.9 762.4 306.2 1,068.6 2,544.5

(1) Establishments primarily engaged in initially underwriting insurance policies.
(2) Includes establishments engaged in underwriting annuities, life insurance and health and medical insurance policies.
(3) Includes claims adjusters, third-party administrators of insurance funds and other service personnel such as advisory and insurance ratemaking services.

Source: U.S. Department of Labor, Bureau of Labor Statistics.

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A property/casualty insurer must maintain a certain level of surplus to underwrite risks. This financial cushion is known as “capacity.” When the industry is hit by high losses, such as a major hurricane, capacity is diminished. It can be restored by increases in net income, favorable investment returns, reinsuring more risk, and/or raising additional capital.

 

Property/Casualty Insurance Industry Income Analysis, 2011-2015 (1)

($ billions)

  2011 2012 2013 2014 2015
Net premiums written  $438.0 $456.7 $477.0 $497.0 $514.0
     Percent change 3.4% 4.3% 4.4% 4.2% 3.4%
Premiums earned  $434.4 $448.9 $467.4 $487.9 $505.8
Losses incurred 290.8 277.7 259.4 277.7 290.6
Loss adjustment expenses incurred 53.8 55.5 55.6 57.3 59.6
Other underwriting expenses 124.2 128.9 134.6 138.3 144.3
Policyholder dividends 1.9 2.1 2.5 2.4 2.5
Net underwriting gain/loss -36.2 -15.4 15.2 12.2 8.7
Net investment income 49.2 48.0 47.3 46.4 47.2
Miscellaneous income/loss 2.5 2.4 1.5 -2.7 1.4
Operating income 15.4 35.0 64.1 55.9 57.3
Realized capital gain 7.0 6.2 11.4 10.3 9.4
Federal and foreign income tax 3.0 6.1 12.0 10.3 10.1
Net income after taxes 19.5 35.1 63.4 55.9 56.6

(1) Data in this chart exclude state funds and other residual market insurers and may not agree with similar data shown elsewhere from different sources.

Source: ISO®, a Verisk Analytics® business.

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Top 10 Writers Of Property/Casualty Insurance By Direct Premiums Written, 2015

($000)

Rank Group/company Direct premiums written (1) Market share (2)
1 State Farm Mutual Automobile Insurance $59,361,685 10.0%
2 Allstate Corp. 30,180,756 5.1
3 Berkshire Hathaway Inc. 29,967,354 5.1
4 Liberty Mutual 29,848,412 5.1
5 Travelers Companies Inc. 23,200,304 3.9
6 Progressive Corp. 21,346,246 3.6
7 Chubb Ltd. (3) 20,671,147 3.5
8 Nationwide Mutual Group 19,577,849 3.3
9 American International Group (AIG) 19,066,161 3.2
10 Farmers Insurance Group of Companies (4) 19,050,733 3.2

(1) Before reinsurance transactions, includes state funds.
(2) Based on U.S. total, includes territories.
(3) Chubb Ltd. data reflects the 2015 merger with Ace Ltd.
(4) Data for Farmers Insurance Group of Companies and Zurich Financial Group (which owns Farmers' management company) are reported separately by S&P Global Market Intelligence.

Source: NAIC data, sourced from S&P Global Market Intelligence, Insurance Information Institute.

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Top 10 Writers Of Life/Health Insurance/Annuities By Direct Premiums Written, 2015

($000)

Rank Group/company Direct premiums written (1) Market share (2)
1 MetLife Inc. $102,487,074 16.4%
2 Prudential Financial Inc. 43,134,670 6.9
3 New York Life Insurance Group 29,647,519 4.8
4 Jackson National Life Group 27,457,195 4.4
5 AEGON  24,983,201 4.0
6 American International Group (AIG) 24,976,781 4.0
7 Principal Financial Group Inc.  23,416,059 3.8
8 Massachusetts Mutual Life Insurance Co.  23,117,904 3.7
9 Lincoln National Corp.  22,676,916 3.6
10 AXA  19,478,236 3.1

(1) Includes life insurance, annuity considerations, deposit-type contract funds and other considerations; excludes accident and health insurance. Before reinsurance transactions.
(2) Based on U.S. total, includes territories.

Source: NAIC data, sourced from S&P Global Market Intelligence, Insurance Information Institute.

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Life/Health Insurance Industry Income Statement, 2011-2015

($ billions, end of year)

  2011 2012 2013 2014 2015 Percent change,
2014-2015 (1)
Revenue            
Life insurance premiums $122.8 $130.5 $126.0 $133.8 $151.4 13.2%
Annuity premiums and deposits 327.0 339.9 279.4 352.8 324.0 -8.2
Accident and health premiums 151.1 151.4 153.3 156.6 158.8 1.4
Credit life, credit accident and health premiums 1.6 1.6 1.4 1.4 1.4 -0.4
Other premiums and considerations 2.1 2.2 2.3 2.6 2.5 -2.2
Total premiums, consideration and deposits $604.5 $625.7 $562.6 $647.3 $638.2 -1.4%
Net investment income 167.3 166.5 167.1 171.7 170.8 -0.6
Reinsurance allowance -16.3 -30.8 -21.2 -15.0 -86.4 NA
Separate accounts revenue 26.1 29.5 31.4 34.3 35.2 2.7
Other income 53.3 41.5 42.8 39.5 90.5 128.9
Total revenue $835.0 $832.5 $782.7 $877.8 $848.2 -3.4%
Expense            
Benefits 61.4 62.4 63.0 66.4 73.3 10.3
Surrenders 237.3 245.7 248.7 281.5 273.0 -3.0
Increase in reserves 141.2 83.8 86.2 108.7 80.5 -25.9
Transfers to separate accounts 32.4 61.6 -0.8 -16.5 36.9 NA
Commissions 51.4 52.6 53.0 52.1 55.5 6.6
General and administrative expenses 56.4 57.2 58.5 59.0 60.1 1.9
Insurance taxes, licenses and fees 7.8 8.0 8.2 10.0 10.5 5.0
Other expenses 8.1 6.7 -0.4 65.8 -4.9 NA
Total expenses $773.5 $757.4 $704.1 $812.4 $775.5 -4.5%
Net income            
Policyholder dividends 15.1 15.2 15.7 16.4 18.3 11.2
Net gain from operations before federal income tax 28.0 59.6 62.9 49.0 54.4 11.0
Federal income tax 4.7 9.9 8.6 10.1 10.6 4.6
Net income before capital gains $22.9 $49.7 $54.3 $38.9 $43.8 12.7%
Net realized capital gains (losses) -8.5 -9.4 -12.0 -1.3 -3.5 NA
Net income $14.4 $40.3 $42.3 $37.6 $40.3 7.3%
Pre-tax operating income 28.0 59.6 62.9 49.0 54.4 11.0

(1) Calculated from unrounded data.

NA=Not applicable.

Source: NAIC data, sourced from S&P Global Market Intelligence, Insurance Information Institute.

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