USA Insurance Market Intelligence

The US insurance market is regarded as one of the best markets in the world, given its wide range of products and excellent customer service. Insurance regulation in the country is fragmented among state authorities but it is coordinated through the National Association of Insurance Commissioners (NAIC). The insurance market in the US primarily functions through two broad categories; namely life and non-life insurance. The non-life segment is relatively broad. Apart from these two categories, there is specialty insurance that includes title insurance, surety bonds, financial guarantee and mortgage guarantee insurance.

The life insurance premiums witnessed a slight decline in 2008 on account of economic slowdown, rising unemployment and loss of income. The P&C segment has witnessed growth mainly on account of two mandatory lines third party automobile insurance, and workers' compensation (for work accidents). Although, the insurance industry did register a slight growth in premium income (mainly due to health & pension) in 2008, the impact of the financial crisis was visible on the insurance industry in Q109 when it recorded a slowdown in premium earned. The US P&C sector is highly fragmented with State Farm Group and American International Group being the largest insurers. Significant catastrophe losses in 2008, coupled with the decline in investment income due to the 2008 financial turmoil in credit and equity markets will continue to affect earnings of the US insurance market in the coming quarters.

The present report gives an overview of the US insurance market along with the analysis of the American political structure and economic growth. The report provides an insight into the market size and trends in insurance premiums of life and non-life insurance sectors. Insurance premiums are discussed in terms of life and non-life segments and the density and penetration levels. The various developments and drivers are also discussed and finally the projections regarding premium growth are given.

By combining SPSS Inc.’s data integration and analysis capabilities with our relevant findings, we have predicted the future growth of the industry. We employed various significant variables that have an impact on this industry and created regression models with SPSS Base to determine the future direction of the industry. Before deploying the regression model, the relationship between several independent or predictor variables and the dependent variable was analyzed using standard SPSS output, including charts, tables and tests.

1. Industry Snapshot

1.1 Industry Structure

1.1.1 Insurance Regulation Fragmented Among State Authorities
1.1.2 Supervision of Insurance Market by NAIC
1.1.3 Classification of Insurance Companies According to SIC Codes

1.2 Market Overview

1.2.1 Market Size & Growth

1.2.1.1 Strong Annuity Sales and Pension Funds Driving Life Insurance Business
1.2.1.2 P&C Segment Boosted by Automobile Insurance Business
1.2.1.3 Rise in Combined Ratio of P&C Insurers Due to Losses and Catastrophic
1.2.1.4 Deteriorating Premiums of P&C Insurers in Q109

1.2.2 Market Segments

1.2.2.1 Non-Life Segment Dominated by Mandatory Third Party Automobile Insurance and Workers' Compensation
1.2.2.2 Catastrophic Losses Eroding Profits of P&C Insurers
1.2.2.3 Introduction of Competitive Products, Such as Universal Life, Variable Life and Variable Annuities
1.2.2.4 Specialty Insurance as Another Segment

1.2.3 Market Density & Penetration

1.2.3.1 Decreasing Trend of Insurance Penetration
1.2.3.2 US Ranks 9th Globally in Terms of Insurance Density

1.2.4 Market Share

1.2.4.1 Fragmented Nature of the US Insurance Industry
1.2.4.2 Non-Life Players less Sensitive to Economic Strains than Life Players
1.2.4.3 Introduction of Competitive Products for Tapping Customers

2. Industry Analysis

2.1 Industry Developments

Amendments in Regulation
Mergers & Acquisitions

2.2 Market Drivers

Expanding Economy
Growing Pension and Annuities Sector
Rising Health Insurance Expenditure
Increasing Vehicle Insurance

3. Country Analysis: Risk Assessment

3.1 Political Environment
3.2 Macro-Economic Indicators: Current and Projections

4. Industry Outlook: Forecast and Projections

4.1 Increased Number of Claims and Losses in Mortgage Market Eroding Profits of P&C Insurers
4.2 Growth in Life Segment Expected to Remain Flat in Coming Quarters
4.3 Exposure to Commercial Real Estate Backed Securities Leading Losses to Life Insurers
4.4 Declining Earnings of Life Insurers Due to Investment Portfolio Losses


List of Tables

US: Average Wages and Salaries (US$) (2001 - 2008)
Key Macroeconomic Indicators: (2008 - 2012F)


List of Charts

Annual Premium - USA Insurance Industry (2001-2008)
Combined Ratio (%) - USA P&C Insurance Industry (2004-2008)
Insurance Premium Share (%) by Segment (2008)
Insurance Premium by Segment (2001 - 2008)
Life Insurance Premium Share (%) by Segment (2008)
P&C Insurance Premium Share (%) by Segment (2008)
US Insurance Density (US$) (2001 - 2008)
US Insurance Penetration (2001 - 2008)
US: Major Property & Casualty Insurer’s Market Share (2008)
US: Major Life Insurer’s Market Share (2008)
US: Top Equity-Indexed Annuities Selling Companies (Q2’2009)
GDP Growth of US (2001 - 2008)
US Average Annual Expenditure on Pension & Social Security (US$) (2001 - 2008)
US Average Annual Expenditure on Health Insurance (US$) (2001 - 2008)
US Average Annual Expenditure on Vehicle Insurance (US$) (2001 - 2008)
Forecast: US Insurance Industry (2008A - 2012F)
Forecast: US Life & Non-Life Insurance Industry (2008A - 2012F)

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