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 331,913 jobs in California in 2017. The California insurance industry accounted for about $27.6 billion in compensation in 2017.

Gross State Product

The insurance industry contributed $35.7 billion to the California gross state product (GSP) in 2016, accounting for 1.34 percent of the state GSP.

Taxes

Premium taxes paid by insurance companies in California totaled $2.4 billion in 2017.

Premiums

Direct premiums written by property/casualty insurance companies in California totaled $76.4 billion in 2017. Premiums written by life/annuity insurance companies totaled $65.2 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 $7.2 billion in gross premiums written in 2017, 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 2017 these payments in California as measured by direct property/casualty incurred losses, were $58.1 billion. Life insurance claims and benefits payouts in California totaled $49.7 billion in 2017.

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 2018 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 ($26.4 billion in 2018 dollars). It ranks as the eighth costliest U.S. disaster, based on insured property losses (in 2018 dollars).

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.

All of the top 10 costliest wildfires in the U.S. occurred in California. Ranked first is the 2018 Camp Fire which caused $8.5 billion to $10.5 billion in insured damages in 2018 dollars, according to Insurance Information Institute estimates.

California has the largest number of households at high to extreme risk for wildfires, according to Verisk. In 2018 the state experienced an outbreak of the deadliest and most destructive wildfires in its history.

Leading Writers

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

Top 10 Writers Of Commercial Insurance In California By Direct Premiums Written, 2018 (1)

 

Rank Group/company Direct premiums written ($000) Market share
1 Chubb $2,475,757 6.0%
2 Berkshire Hathaway Inc. 2,442,129 5.9
3 Travelers 2,223,722 5.4
4 Liberty Mutual 2,185,866 5.3
5 Zurich 1,561,119 3.8
6 American International Group (AIG) 1,546,098 3.7
7 Farmers Insurance 1,471,261 3.6
8 State Compensation Insurance Fund 1,338,989 3.2
9 The Hartford 1,315,203 3.2
10 Nationwide 1,309,791 3.2

(1) Before reinsurance transactions.

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

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Top 10 Writers Of Earthquake Insurance In California By Direct Premiums Written, 2018

 

Rank Group/company Direct premiums written (1) Market share (2)
1 CA Earthquake Authority $774,296 41.2%
2 Zurich  163,312 8.7
3 Chubb  99,447 5.3
4 GeoVera Holdings  78,526 4.2
5 Palomar Specialty Insurance Co. 78,170 4.2
6 AIG  77,496 4.1
7 Everest Re  47,041 2.5
8 Travelers  39,071 2.1
9 AXA  38,578 2.1
10 Markel  37,880 2.0

(1) Before reinsurance transactions, includes state funds.
(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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Top 10 Writers Of Homeowners Insurance In California By Direct Premiums Written, 2018 (1)

 

Rank Group/company Direct premiums written ($000) Market share
1 State Farm $1,469,169 17.6%
2 Farmers Insurance Group 1,335,894 16.0
3 CSAA Insurance Exchange 544,788 6.5
4 Liberty Mutual 521,782 6.2
5 Auto Club Exchange Group 510,731 6.1
6 Allstate Corp. 494,685 5.9
7 USAA Insurance Group 443,773 5.3
8 Mercury General Corp. 439,899 5.3
9 Nationwide Mutual Group 347,199 4.2
10 Travelers Companies Inc. 266,389 3.2

(1) Before reinsurance transactions.

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

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Top 10 Writers Of Life Insurance/Annuities In California By Direct Premiums Written, 2018 (1)

 

Rank Group/company Direct premiums written ($000) Market share
1 Prudential Financial Inc.  $4,971,738 8.8%
2 Transamerica 3,521,521 6.2
3 New York Life Insurance Group  3,186,889 5.7
4 American International Group (AIG) 2,683,844 4.8
5 Massachusetts Mutual Life Insurance Co.  2,670,852 4.7
6 John Hancock Life Insurance Co. 2,489,729 4.4
7 Lincoln National Corp.  2,232,556 4.0
8 MetLife Inc.  1,943,600 3.4
9 Nationwide Mutual Group  1,852,599 3.3
10 Allianz 1,772,743 3.1

(1) Includes life insurance, accident and health insurance, annuity considerations, deposit-type contract funds and other considerations. Before reinsurance transactions.

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

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Top 10 Writers Of Private Passenger Auto Insurance In California By Direct Premiums Written, 2018 (1)

 

Rank Group/company Direct premiums written ($000) Market share
1 State Farm $4,106,038 13.7%
2 Farmers Insurance Group  3,191,341 10.7
3 Berkshire Hathaway Inc. 2,897,713 9.7
4 Allstate Corp. 2,687,887 9.0
5 Auto Club Exchange Group 2,598,340 8.7
6 Mercury General Corp. 2,323,282 7.8
7 CSAA Insurance Exchange 2,150,289 7.2
8 Kemper Corp. 1,958,386 6.6
9 Progressive 1,363,162 4.6
10 USAA Insurance Group 1,341,068 4.5

(1) Before reinsurance transactions.

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

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State By State Comparison Tables

Directories

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