Property & Casualty Insurance Carriers
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 2,500 property and casualty insurance carriers in the US underwrite insurance policies that protect policy holders against losses that may occur as a result of property damage or liability. Major types of policies include vehicle property and liability; property and liability; and general liability. Other types of policies sold include health, life, and accident insurance. Large firms may offer reinsurance policies, which limit the amount insurers can lose.
Uncertainty Related to Risk and Losses
Success in the property and casualty insurance business is dependent on a firm’s ability to underwrite and price risk accurately and estimate losses.
Natural Disasters and Other Catastrophes
Damage and destruction due to natural disasters and other catastrophes expose property and casualty insurers to the financial burden of covering massive losses.
Industry size & Structure
The average property and casualty insurance carrier employs about 236 workers and generates $283 million annually.
- The property and casualty insurance industry consists of about 2,500 firms that employ 590,000 workers and generate almost $708 billion annually.
- The industry is highly concentrated; the top 50 companies account for about 82% of industry revenue.
- Large firms include State Farm, Berkshire Hathaway, and Liberty Mutual.
Industry Forecast
Property & Casualty Insurance Carriers Industry Growth
Recent Developments
Jul 18, 2024 - Labor Costs Increase
- Property and casualty insurance carrier industry employment and wages for nonsupervisory employees increased slightly during the first five months of 2024, according to the US Bureau of Labor Statistics (BLS). Property and casualty insurance carriers slightly increased their prices during the first five months of 2024, according to the BLS.
- Total damage and economic loss in the US from Hurricane Beryl is expected to be between $28 and $32 billion, according to AccuWeather. Beryl, the earliest Category 5 hurricane on record in the Atlantic, brought tornadoes and flooding through eastern Texas and into Arkansas and southeastern Missouri before moving toward the Midwest and then New England. Hurricane Idalia struck Florida in 2023 and caused $18 to 20 billion in total damage and economic loss. Hurricane Ian caused $180 to $210 billion in damage and economic loss from Florida through the Carolinas in 2022, and Hurricane Harvey impacted a similar area in Texas and caused $230 billion in total damage and economic loss in 2017, according to AccuWeather.
- Increasing loss severity for casualty lines such as commercial auto, professional liability, product liability, and directors and officers (D&O) liability has in most cases outstripped economic inflation by at least double, with social inflation the largest cause of adverse loss development, according to AM Best. Social inflation is a term that describes how insurers’ claims costs are increasing above general economic inflation. This is generally thought to be due to a trend in increasing litigation costs brought by plaintiffs seeking large monetary relief for their injuries. The “social” aspect of the term represents shifting social and cultural attitudes about who is responsible for absorbing risk (the insurer or the plaintiff). The average loss severity increase over the past decade to 2023 in the product liability line, for example, was 20.4%, compared with average annual economic inflation of 2.7%. The AM Best report notes studies that have shown sentiments toward major public corporations have become more unfavorable, allowing attorneys to capitalize on the shifting attitudes. This decrease in confidence in big business and in other institutions (e.g., federal government, banks), is a problem for insurers, AM Best notes, because jury verdicts have shown that many jurors believe that a company bears some responsibility even in cases of injury due to misuse of a product.
- Profitability was below US property and casualty insurers' cost of capital in 2023 but strong premium increases, easing claims cost inflation, and higher investment returns began boosting industry results by the second half, according to Swiss Re Institute. The trends are expected to continue in 2024, supporting profitability improvement. Personal lines premiums are increasing faster and easing economic inflation primarily benefits personal lines claims costs while social inflation mostly impacts commercial lines. Swiss Re Institute forecasts industry return on equity at 9.5% in 2024 and 10.0% in 2025, supported by premium growth of 7.0% and 4.5% respectively in these years.
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