A Firm Foundation: How Insurance Supports the Economy

Key Facts: The Insurance Industry’s Contribution To The California Economy

The insurance industry in California has a significant impact on the state’s economy that extends well beyond its responsibilities to collect premiums and settle claims. It employs licensed professionals, pays taxes, owns municipal bonds and serves people in their times of greatest need.

Employment

U.S. Department of Commerce data show the insurance industry provided 331,469 jobs in California in 2018. The California insurance industry accounted for about $28.4 billion in compensation in 2018.

Gross State Product

The insurance industry contributed $40.2 billion to the California gross state product (GSP) in 2017, accounting for 1.4 percent of the state GSP.

Taxes

Premium taxes paid by insurance companies in California totaled $2.7 billion in 2019.

Premiums

Direct premiums written by property/casualty insurance companies in California totaled $76.4 billion in 2019. Premiums written by life/annuity insurance companies totaled $75.5 billion (including life insurance, annuities, accident and health insurance, deposit type funds and other considerations).

Surplus Lines

The surplus lines market, a group of highly specialized insurers, exists to provide coverage that is not available through licensed insurers in the standard insurance market. For the many thousands of businesses that rely on some level of surplus line protection to keep their doors open, surplus lines is an important segment of the market. The California surplus lines market accounted for $9.1 billion in gross premiums written in 2018, according to a survey by Business Insurance.

Claims Payments

Insurance company claims payments help ensure the economic security of individuals and businesses and help sustain a number of related industries. In 2019 these payments in California as measured by direct property/casualty incurred losses, were $44.5 billion. Life insurance claims and benefits payouts in California totaled $54.1 billion in 2019.

Catastrophes

The insurance industry plays a vital role in helping individuals and businesses prepare for and recover from the potentially devastating effects of a disaster such as a catastrophic hurricane or storm or wildfire. California is vulnerable to earthquakes, wildfires and landslides.

Six of the costliest U.S. earthquakes from 1980 to 2019 were in California, according to Munich Re. The 1994 Northridge quake was the costliest U.S. earthquake on record, causing $15.3 billion in insured damages when it occurred ($26.9 billion in 2019 dollars). It ranks as the eighth costliest U.S. disaster, based on insured property losses.

In 2019, the sparsely populated Ridgecrest City section of California was struck by a pair of significant earthquakes. On July 4 a 6.4-magnitude “foreshock” earthquake hit the area, followed by a stronger 7.1-magnitude quake the following day, along with a number of aftershocks. The 7.1 quake was the largest to hit the state in 20 years. According to Karen Clark and Co., insured losses from the quakes is estimated to total less than $40 million.

In 2018 the state experienced an outbreak of the deadliest and most destructive wildfires in its history.

California has the largest number of households at high to extreme risk for wildfires, according to Verisk. All of the top 10 costliest wildfires in the U.S. occurred in California. Ranked first is the 2018 Camp Fire which caused $8.7 billion to $10.7 billion in insured damages in 2019 dollars, according to Insurance Information Institute estimates.

Leading Writers

Below are tables showing the state’s leading insurance companies, based on market share, and links to state by state comparison tables.

State By State Comparison Tables

• Employment
• Premiums
• Surplus Lines
• Gross State Product
• State Taxes
• Insurance Companies By State
• Catastrophes By State
• Residual Markets
• Captives By State
• Incurred Losses By State
• Insured Cars By State
• Insured Homes By State
• Businesses By State

Directories

• State Insurance Departments
• State Organizations

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