How Does The Insurance Industry Contribute To The National Economy?
The insurance industry taken as a whole — life, health, property, casualty — posted a significant economic impact on the national economy over the 10-year-period from 2003 to 2012. The Insurance Information Institute (I.I.I.) recently took an in-depth look at how deep the impact went in terms of employment, payroll, net premiums written, taxes, and a variety of other factors. Here are some of the key findings:
Employees And Payroll
The insurance industry continues to be one of the largest employment sectors in the United States, according to the I.I.I. Numbers for 2012, in particular, showed a slight jump from the year previous with around 2,337,100 employees (up from 2,299,900 in 2011).
Insurance carriers led the way in 2012 with 1,424,800 (up from 1,409,700 in 2011), while insurance agencies, brokerages, and related services totaled 912,300 in 2012, versus 890,200 the year before.
By far, the most employed sub-sector for carriers was in the area of life, health, and medical with 807,900 employees. Property/casualty carriers employed 591,300 and reinsurers, 25,600.
In the area of agencies, brokerages, and related services, the major employment sub-sector was insurance agencies and brokers, with 658,400. “Other insurance-related activities,” like HR administrators, public relations managers, and financial analysts, accounted for 253,800.
The number of employees in the insurance industry as a whole was the highest it’s been since 2008 when the industry employed 2,366,700.
Insurance payrolls, which cover insurance carriers and related activities compensation, were the highest in 2012 — the last available year of data — than they’ve been in a five-year period. According to the US Department of Commerce, Bureau of Economic Analysis, in 2012, the industry spent $214.1 billion on personnel, up from $192.6 billion in 2008 (an increase of more than 10 percent).
Net Premiums Written
Property/casualty (P/C), consisting mainly of auto, home and commercial insurance, and Life/health (L/H), consisting mainly of life insurance and annuity products rose by 3.3 percent and 3.7 percent, respectively, in 2012. According to the I.I.I. numbers, net premiums written totaled more than $1.098 trillion.
L/H led the way with $642.6 billion NPW, while P/C composed the remaining $456.1 billion. The overall numbers were the highest they’ve been in the 10-year period from 2003 to 2012 (and likely the highest ever).
From 2003 to 2012, P/C showed a 12 percent increase, slowing down the more significant momentum of L/H (a 34.5 percent increase) for a positive change of 24.2 percent.
The I.I.I. points out that the insurance industry “is a major source of tax revenue on the state and federal level,” noting that in 2012 property/casualty insurers and life insurers incurred federal and foreign taxes of more than $16 billion dollars.
“Insurance companies, including life/health and property/casualty companies, paid $16.7 billion in premium taxes to the 50 states in 2012. On a per capita basis, this works out to $53 for every person living in the United States,” the report stated.
The specific breakdown included L/H taxes totaling $10.2 billion and the P/C side incurring $6.3 billion. When weighed against the previous year, both L/H and P/C groupings doubled (up from $3 billion for P/C and $5.1 billion for L/H).
2012 was the best year for tax revenue from the industry since 2010 when the total settled at $17.9 billion.
Insurance is an important part of life. Whether it be the care that it provides when we’re sick, the assistance it offers when disaster strikes, or the security it affords to us and our loved ones. It’s also one of the largest employers and tax contributors in the national economy, year-in and -out.
Here’s the full report from the I.I.I., for those interested. Give it a look to see the full reach of the industry.