Industry Overview

INSURANCE INDUSTRY AT A GLANCE

  • The insurance industry’s net premiums written totaled $1.1 trillion in 2007, with premiums recorded by life/health insurers accounting for 58 percent and premiums by property/casualty insurers accounting for 42 percent.
  • Property/casualty insurance consists mainly of auto, home and commercial insurance, as well as a small amount of health insurance.  Net premiums written for the sector totaled $448 billion in 2007.
  • The life/health insurance sector consists of annuities and life insurance, along with some health insurance.  Net premiums written for the sector totaled $617 billion in 2007.
  • Private health insurance is generally considered separately.  It accounted for $331 billion in premiums in 2007, not including the health premiums written by L/H insurers ($155 billion in 2007) and P/C insurers ($7 billion in 2007).
  • There were 2,723 P/C insurance companies and 1,190 L/H insurance companies in the United States in 2007.
  • Insurance carriers and related activities accounted for $281 billion or 2.1 percent of U.S. gross domestic product in 2006 (latest data available).
  • The U.S. insurance industry employed 2.3 million people in 2008. Of those, 1.4 million worked for insurance companies, including life, health and medical insurers (804,200 workers) property/casualty insurers (569,200 workers) and reinsurers (28,400 workers). The remaining 907,000 work for insurance agencies, brokers and other insurance related enterprises.
  • Total P/C cash and invested assets were $1.3 trillion in 2007. L/H cash and invested assets totaled $3 trillion in 2007.
  • In 2007, P/C insurers invested 66 percent of their assets in bonds, highly liquid securities which can be sold quickly to pay claims in the event of a major disaster.  L/H insurers invested 73 percent of their assets in bonds.
  • Insurance companies, including P/C and L/H, paid $15.7 billion in premium taxes in 2008, or $52 for every person living in the United States.
  • P/C insurers paid out $25.2 billion to their policyholders for insured losses from catastrophes in 2008, including $10.7 billion caused by Hurricane Ike, $2.1 billion from Hurricane Gustav, and $3.6 billion from tornadoes and related damage.

PREMIUMS OF PROPERTY/CASUALTY AND LIFE/HEALTH INSURANCE INDUSTRIES, 1998-2007
($ billions, excludes state funds)
PREMIUMS OF PROPERTY/CASUALTY AND LIFE/HEALTH INSURANCE INDUSTRIES, 1998-2007

(1) Includes deposit-type funds beginning in 2001.

Source: National Association of Insurance Commissioners (NAIC) Annual Statement Database, via Highline Data, LLC. Copyrighted information. No portion of this work may be copied or redistributed without the express written permission of Highline Data, LLC.

 

Employment In Insurance, 1999-2008

EMPLOYMENT IN INSURANCE, 1999-2008 (Annual averages, 000)

  Insurance carriers      Insurance agencies, brokerages and related services      
  Direct insurers (1)                
 Year Life, health and medical Property/ casualty Reinsurers Total Insurance agencies and brokers Other insurance- related activities (2) Total  Total industry  Insurance and employee benefit funds (3)

1999

815.3

603.9

33.5

1,452.7

585.3

198.1

783.4

2,236.1

44.9

2000

808.8

591.6

32.3

1,432.7

587.5

200.3

787.8

2,220.6

46.4

2001

807.7

591.3

31.4

1,430.4

597.9

205.3

803.2

2,233.7

48.4

2002

791.1

590.0

31.7

1,412.8

616.0

204.4

820.4

2,233.2

47.2

2003

789.0

608.6

31.0

1,428.6

628.5

208.9

837.4

2,266.0

47.1

2004

764.4

604.4

29.8

1,398.6

643.3

216.8

860.1

2,258.6

47.0

2005

761.9

595.0

28.8

1,385.7

650.1

223.5

873.6

2,259.3

46.4

2006

787.4

597.4

28.0

1,412.8

659.9

230.9

890.8

2,303.7

47.8

2007

784.0

586.1

27.0

1,397.1

675.3

234.5

909.8

2,306.8

48.6

2008

804.2

569.2

28.4

1,401.8

670.1

236.9

907.0

2,308.8

49.2

(1) Establishments primarily engaged in initially underwriting insurance policies.
(2) Includes claims adjusters, third-party administrators of insurance funds and other service personnel such as advisory and insurance ratemaking services.
(3) Includes employees of legal entities organized to provide insurance and employee benefits exclusively for the sponsor, or its employees or members. These employees are not included in the total for the insurance industry. 

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

 

POLICYHOLDERS' SURPLUS

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, 2003-2007 (1)

($ billions)

  2002 2003 2004 2005 2006
Net written premiums $369.7 $404.4 $424.1 $425.7 $443.8
     Percent change 14.3% 9.4% 4.9% 0.3% 4.3%
Earned premiums $348.5 $386.3 $413.8 $417.7 $435.8
Losses incurred 238.8 238.7 247.8 256.3 231.1
Loss adjustment expenses incurred 44.8 50.0 53.1 55.1 52.6
Other underwriting expenses 93.8 100.7 106.8 109.8 117.5
Policyholder dividends 1.9 1.9 1.7 1.9 3.4
Underwriting gain/loss -30.8 -4.9 4.3 -5.6 31.2
Investment income 37.2 38.6 40.0 49.7 52.3
Miscellaneous income/loss -0.8 0.0 -0.3 1.0 1.0
Operating income/loss 5.6 33.8 44.0 45.1 84.6
Realized capital gains/losses -1.2 6.6 9.1 9.7 3.4
Incurred federal income taxes/credit 1.3 10.3 14.6 10.7 24.2
Net income after taxes 3.0 30.0 38.5 44.2 63.7
(1) Data in this chart may not agree with similar data shown elsewhere due to different sources.

Source: ISO.

 

  • The U.S. property/casualty industry posted a $19.0 billion net gain on underwriting in 2007, down $12.1 billion from a $31.1 billion gain in 2006, reflecting a weakness in premiums and increases in the cost of providing insurance protection, according to ISO.

Top Ten Writers Of Property/Casualty Insurance By Direct Premiums Written, 2007

TOP TEN WRITERS OF PROPERTY/CASUALTY INSURANCE BY DIRECT PREMIUMS WRITTEN, 2007 ($000)

Rank Group Direct premiums written (1) Market share (2)
1 State Farm Group $49,350,411 9.9%
2 American International Group (AIG) (3) 37,665,191 7.5
3 Zurich Insurance Group 29,108,738 5.8
4 Allstate Insurance Group 27,688,687 5.5
5 Travelers Group 22,151,582 4.4
6 Liberty Mutual Insurance Group 20,235,814 4.1
7 Nationwide Group 16,122,638 3.2
8 Berkshire Hathaway Insurance Group 15,368,968 3.1
9 Progressive Group 13,983,744 2.8
10 Hartford Fire & Casualty Group 11,508,537 2.3
(1) Before reinsurance transactions, excluding state funds.
(2) Based on U.S. total including territories.
(3) In 2008 AIG ceded 79.9 percent of its ownership to the federal government in exchange for an $85 billion loan.

Source: National Association of Insurance Commissioners (NAIC) Annual Statement Database, via Highline Data, LLC. Copyrighted information. No portion of this work may be copied or redistributed without the express written permission of Highline Data, LLC.

Top Twenty U.S. Property/Casualty Companies By Revenues, 2007 (1)

($ millions)

Rank Group Revenues Assets
1 Berkshire Hathaway $118,245 $273,160
2 American International Group 110,064 1,060,505
3 State Farm Insurance Cos. 61,612 181,422
4 Allstate 36,769 156,408
5 Travelers Cos. 26,017 115,224
6 Liberty Mutual Insurance Group 25,961 94,679
7 Hartford Financial Services 25,916 360,361
8 Nationwide 22,962 161,090
9 Loews (CNA) 17,920 76,079
10 Progressive 14,687 18,843
11 United Services Automobile Association (USAA) 14,418 67,177
12 Chubb 14,107 50,574
13 Assurant 8,454 26,750
14 First American Corp. 8,196 8,648
15 American Family Insurance Group 6,969 16,004
16 Safeco 6,209 12,640
17 W.R. Berkley 5,554 16,832
18 Fidelity National Financial 5,524 7,556
19 Auto-Owners Insurance 5,129 13,680
20 Erie Insurance Group 4,737 14,215
(1) Revenues for insurance companies include premium and annuity income, investment income and capital gains or losses but exclude deposits.

Source: Fortune.

Top Twenty U.S. Life/Health Insurance Groups By Revenues, 2007 (1)

($ millions)

Rank Group Revenues Assets
1 MetLife $53,150 $558,562
2 Prudential Financial 34,401 485,814
3 New York Life Insurance 29,280 179,621
4 TIAA-CREF 27,526 420,315
5 Massachusetts Mutual Life Insurance 25,268 172,911
6 Northwestern Mutual 22,597 156,547
7 AFLAC 15,393 65,805
8 Genworth Financial 11,443 114,315
9 Principal Financial 10,907 154,520
10 Lincoln National 10,738 191,435
11 Unum Group 10,567 52,433
12 Guardian Life Insurance Company of America 10,071 41,319
13 Thrivent Financial for Lutherans 6,133 57,412
14 Pacific Life 5,325 111,024
15 Western & Southern Financial Group 4,811 30,941
16 Conseco 4,572 33,515
17 Mutual of Omaha Insurance 4,337 17,746
18 CUNA Mutual Group 3,850 14,946
19 Torchmark 3,487 15,241
20 American National Insurance 3,071 18,465

(1) Revenues for insurance companies include premium and annuity income, investment income and capital gains or losses but exclude deposits.

 

Source: Fortune.

Property/Casualty Insurer Financial Asset Distribution, 2003-2007

($ billions)

  2003 2004 2005 2006 2007
Total financial assets $1,059.7 $1,162.2 $1,243.8 $1,329.3 $1,373.6
Checkable deposits and currency 34.6 25.9 21.0 29.9 42.7
Security repurchase agreements (1) 52.8 63.1 68.9 66.0 53.8
Credit market instruments 625.2 698.8 765.8 813.5 840.0
     U.S. government securities 180.1 183.4 187.1 197.8 180.9
          Treasury 64.7 71.3 69.2 75.8 55.1
          Agency- and GSE (2)-backed securities 115.4 112.1 117.9 122.0 125.8
     Municipal securities 224.2 267.8 313.2 335.2 368.7
     Corporate and foreign bonds 218.9 245.3 262.8 277.0 285.6
     Commercial mortgages 2.1 2.4 2.7 3.5 4.8
Corporate equities 178.4 196.6 199.5 227.0 235.3
Trade receivables 79.3 79.6 82.1 87.0 85.4
Miscellaneous assets 85.0 93.0 100.7 99.0 108.7

(1) Short-term agreements to sell and repurchase government securities by a specified date at a set price.
(2) Government-sponsored enterprise. 

Source: Board of Governors of the Federal Reserve System, June 5, 2008.