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 322,897 jobs in California in 2016. The California insurance industry accounted for about $26.2 billion in compensation in 2016.

Gross State Product

The insurance industry contributed $35.3 billion to the California gross state product (GSP) in 2015, accounting for 1.42 percent of the state GSP.

Taxes

Premium taxes paid by insurance companies in California totaled $2.6 billion in 2016.

Premiums

Direct premiums written by property/casualty insurance companies in California totaled $73.1 billion in 2016. In addition, premiums written by life/health insurance companies totaled $65.1 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 $8.2 billion in gross premiums written in 2016, 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 2016 these payments in California as measured by direct property/casualty incurred losses, were $42.6 billion. Life insurance claims and benefits payouts in California totaled $44.6 billion in 2016.

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.

Eight of the 10 costliest U.S. earthquakes occurred in California, topped by the 1994 Northridge earthquake, which caused about $24.5 billion in insured damages in 2015 dollars, according to Munich Re. But in 2016 only 11 percent of California homeowners had earthquake insurance, according to the California Insurance Department. In August 2014, a 6.0 magnitude quake occurred in South Napa, California causing $700 million in total damage and $150 million in insured losses.

Eight of the 10 costliest wildfires occurred in California, topped by the 1991 Oakland fire, which caused $2.7 billion in insured damages in 2015 dollars, according to the Property Claim Services unit of Verisk.

In 2016 California ranked second in the nation for wildfires with 7,349 fires. It also ranked second by number of acres burned with 560,815 acres.

In October 2017, eight counties in northern California were hit by a devastating outbreak of wildfires which led to at least 23 fatalities, burned 245,000 acres and destroyed over 8,700 structures. AIR estimated that insured losses from the fires would be between $2 billion and $3 billion. The California Department of Insurance said that as of October 26, losses reported from 15 major insurers totaled $3.3 billion, including residential and commercial property, personal and commercial auto, agriculture and watercraft.

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 And Annuity Considerations In California, 2015 (1)

 

Rank Group/company Premiums and annuity considerations ($000) Market share
1 Prudential Financial Inc.   $3,872,169 7.6%
2 AEGON   3,301,142 6.4
3 New York Life Insurance Group   2,799,781 5.5
4 Jackson National Life Group   2,646,364 5.2
5 American International Group (AIG)   2,508,141 4.9
6 Manulife Financial Corp.   2,311,911 4.5
7 MetLife Inc.   2,263,474 4.4
8 Lincoln National Corp.   2,096,772 4.1
9 Voya Financial Inc.   1,887,780 3.7
10 Principal Financial Group Inc.   1,814,064 3.5

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

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

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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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