Executive Counsellor Guild

INSURANCE OVERVIEW

The U.S. insurance industry, which is made up of property/casualty and life/health companies and agents, brokers and service personnel for all sectors, employed 2.3 million people in 2004.

There were 3,330 property/casualty insurance companies in the United States in 2002. Many of these companies were part of larger entities.

Insurance premiums (property/casualty and life/health) worldwide totaled $2.9 trillion in 2003. In the U.S. alone, insurance premiums totaled $1,055.5 billion in 2003, up 4.9 percent from $1,006.0 billion in 2002. Premiums in the property/casualty sector totaled $574.6 billion (including state funds), while life/health premiums totaled $480.9 billion.

The transaction value of insurance-related mergers and acquisitions totaled $58.5 billion in 2003, up from $9.7 billion in 2002. The property/casualty insurance industry's rate of return on a statutory basis was 10.2 percent in 2003, up from 3.3 percent in 2002.

The property/casualty insurance industry had a $30.4 billion after-tax net gain in 2003, up from $9.7 billion dollars in 2002. U.S. catastrophe losses rose from $12.9 billion in 2003 to $27.3 billion in 2004. The total for insured property losses from the September 11, 2001 terrorist attacks has been revised and now stands at $18.8 billion. A property/casualty insurer must maintain a certain level of capital and surplus to underwrite risks. This capital is known as "capacity."

When the industry is hit by high losses, such as after the World Trade Center terrorist attack, capacity is diminished. It can be restored by increases in net income, favorable investment returns, reinsuring more risk, and/or raising additional capital.

When there is excess capacity, usually because of a high return on investments, premiums tend to decline as insurers compete for market share. As premiums decline, underwriting losses are likely to grow, reducing capacity and causing insurers to raise rates and tighten conditions and limits.

Over the last 10 years, employment in the insurance industry (all sectors) has averaged 2.1 percent of the total U.S. employment.

In 2004, net income after taxes, at $38.7 billion, was at the highest level since 1998, at $30.8 billion.

Online Resources:

About.com
http://insurance.about.com/
An insurance industry portal from About.com. About.com offers "practical advice and solutions for every day life." The insurance page contains industry news, links to industry associations, "The Big List of Insurance Company Web Sites" and "The Big List of Insurance Company Home Pages."

A.M. Best
http://www.ambest.com/directory/ascdir.html?l=1&
Menu=Industry+Resources,Insurance+Associations
A comprehensive, alphabetized list of insurance associations. A.M. Best is a world-wide insurance rating and information agency with more than 100 years of history. It is the largest and longest-established company devoted to issuing in-depth reports and financial-strength ratings about insurance organizations. Also publishes books, directories, CD-ROMs and Internet services pertaining to the insurance industry.

Insurance Information Institute
www.iii.org
The mission of I.I.I is to improve public understanding of insurance – what it does and how it works. I.I.I. also published a host of pamphlets and books.

Munich American Reassurance Company
www.marclife.com/links/insassoc.htm
Provides links to insurance associations, life insurance resources, medical and health resources and miscellaneous resources. Munich American Reassurance Company (MARC) is a stock life insurance company offering Life, Annuity, and Accident & Health reinsurance throughout the United States.

National Association of Insurance Commissioners
www.naic.org
Assists state insurance regulators, individually and collectively, in serving the public interest and achieving fundamental insurance regulatory goals in a responsive, efficient and cost effective manner. Provides links to state insurance department websites: http://www.naic.org/state_contacts/sid_websites.jsp.

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