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
Jan 30, 2025 - Revived GOP Effort to Close the Consumer Financial Protection Bureau
- With Republicans sweeping into power at all levels of the federal government, there’s a new effort to shutter the Consumer Financial Protection Bureau (CFPB). 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. President Trump and the GOP can’t eliminate the agency, which requires an act of Congress. Another hurdle is the CFPB’s unique set up: It is funded directly by the Federal Reserve and independent of the Congressional appropriations process. Republican options include simply never naming new management to the agency, or moves like a bill introduced by Senator Ted Cruz of Texas that would restrict the Fed from transferring money to the CFPB. It’s unclear, however, if Congress has any authority over the agency.
- Traditionally regulated insurers are leaving the market 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.
- High inflation and increasingly erratic climate-related losses put pressure on non-life insurance lines’ profitability over the past few years, according to Deloitte. Many insurers responded by hiking premium pricing and reducing coverage for certain high risks. Life insurance and annuity carriers jockeyed for position in a crowded field to take advantage of the surge in consumer interest in savings-linked products as interest rates increased. These short-term strategies helped drive the best year-over-year underwriting results for property and casualty (P&C) carriers since 2007 in the first quarter of 2024 and the highest first quarter sales of annuities for life and annuity (L&A) providers since the 1980s.
- The finance and insurance sector was among the 10 sectors reporting growth, as measured by the Institute for Supply Management’s Services Purchasing Managers’ Index, in November 2024. US finance and insurance sector employment increased slightly during the first 10 months of 2024, according to the US Bureau of Labor Statistics. Corporate profits for financial firms increased 29.65% year over year and 7% quarter over quarter during the first quarter of 2024, according to the US Bureau of Economic Analysis (BEA).
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