US Finance and Insurance Sector
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 479,320 establishments in the finance and insurance sector engage in the creation, liquidation, and transfer of financial assets and/or support financial transactions. The sector connects savers and investors with borrowers and includes financial intermediaries, which use the funds of savers to make loans or investments. Firms may also act as agents and invest on behalf of others. The infrastructure of financial markets includes systems that provide information, payment, clearing, and settlement services that support and facilitate transactions.
Balancing Risk and Reward
Risk is an integral part of financial markets, and investments can lose some to even all of their value under certain types of conditions.
Government Regulation
Industries in the finance and insurance sector are subject to extensive government regulation at varying levels.
Industry size & Structure
The finance and insurance sector is comprised of 479,320 establishments that employ 6.7 million workers and generate $5.7 trillion in annual revenue, according to government sources.
- The finance and insurance sector represents 8.9% of the nation's Gross Domestic Product (GDP) and employs 5% of the country's workers.
- The sector is somewhat concentrated at the top with the 20 largest firms representing 29% of revenue, but it is fragmented at the bottom.
- In addition to employer establishments, the finance and insurance sector has 755,000 owner-operated establishments with no employees. The subsector with the highest numbers of nonemployer establishments is agencies, brokerages, and other insurance-related activities (54%). The owners of nonemployer establishments typically perform the work and may outsource support functions like marketing and accounting.
- The finance and insurance sector shed about 90,000 establishments in 2021, which equals about 16% of existing establishments, according to the Bureau of Labor Statistics. However, the sector added about 119,000 new establishments, which is equivalent to 21% of existing establishments. As a result, the sector had a growth rate of 5.1%.
- The finance and insurance sector is forecast to grow its employment base by 4.4% overall in 2021-2031, which is lower than the national average of 5.3% for all jobs, according to the Bureau of Labor Statistics.
Industry Forecast
US Finance and Insurance Sector Industry Growth
Recent Developments
Mar 19, 2025 - Commercial Banking Net Income Rises
- Net income for the banking industry rose to $286.2 billion for the year 2024, a 5.6% increase from the prior period, but still well below pre-pandemic levels, according to the Federal Deposit Insurance Corporation (FDIC). One-time events during the year resulted in lower expenses, higher noninterest income, and smaller losses on securities. Community banks, though, saw a 2.4% net income dip for the year to $29.5 billion - largely due to higher noninterest expenses (up 6.1%) and higher provision expenses (up 20%). Those expenses, among other losses, took a bite out of community banking’s $2.2 billion in net interest income and $1.1 billion in noninterest income.
- The Trump administration’s threatened steep tariffs on Mexican, Canadian, and Chinese goods will see ripple effects and price increases downstream into the insurance market, according to industry experts. If lumber, steel, aluminum, and semiconductors from those three countries are subjected to double-digit tariffs, insurance underwriters will pass those costs on in the form of soaring premiums. Canada accounts for half of all US wood imports and 20% of metal imports. Added tariffs will cause home repair costs to soar given the more expensive materials needed, and insurers will raise premiums as a result. The same situation will play out in the auto industry - if the estimated cost of repairs and claims rises due to tariffs, so will customer premiums. Insurify, an insurance comparison shopping site, estimates an 8% rise in auto premiums in 2025 as a result of tariffs.
- Trump has aggressively moved to shutter the Consumer Financial Protection Bureau (CFPB) since entering office. The independent agency launched in 2011 - a result of the financial crisis three years earlier - and is charged with crafting rules to protect consumers from predatory financial practices. Republicans have long criticized CFPB as an unelected bureaucracy enacting arbitrary rules. Trump can’t eliminate the agency on his own, which requires an act of Congress, but he has appointed Treasury Secretary Scott Bessent as its Acting Director. Bessent promptly ordered the agency to suspend all operations after his appointment, leaving the agency in limbo as its defenders filed lawsuits against the administration. CFPB could be hard to close because of its unique set up: It is funded directly by the Federal Reserve and independent of the Congressional appropriations process.
- Traditionally regulated insurers are leaving high-risk areas, and thinly capitalized companies that don’t meet normal regulatory standards are filling the gap, according to former Federal Reserve governor Sarah Bloom Raskin. Banks, which require homeowner insurance, accept this form of insurance because banks and other mortgage lenders seldom hold onto the mortgage paper, according to The American Prospect. The market share of homeowner insurance in Florida provided by these lightly regulated insurers grew to 50 percent by 2018, according to a Harvard Business School (HBS) report titled When Insurers Exit: Climate Losses, Fragile Insurers, and Mortgage Markets. A new, nontraditional rating agency called Demotech gives these companies high ratings. At least 15 of these Demotech-approved insurers became insolvent during the period of the HBS study, according to Professor Ishita Sen, one of the report authors.
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