P & C Insurance Industry Overview in USA
Property and casualty insurance is a wider term which includes many types of insurance. The term property and casualty insurance include two primary coverage types namely property protection and liability coverage.
Property insurance is relatively easy to explain. It covers many types of insurance which are meant to cover property losses/risks that we face or may face when things we own gets damaged or destroyed. There are three common types of property loss – Loss of or damage to the article itself, loss of income from the use of the article and the extra expense incurred due to the loss of the article. Some types of insurance generally considered to be property insurance include Dwelling, Homeowners, Industrial property, Crime, Machinery breakdown protection (also known as boiler and machinery), Inland marine and Ocean marine. Examples of this type of loss are the theft of a gold necklace or damage to a car caused by an accident.
1. For example, suppose a restaurant burns down. In the required time to build the restaurant again, the owner faces a loss of 1 Million Dollar sales. This loss of income that comes up due to the damage to the restaurant is a kind of property loss.
2. For instance, suppose a large fire destroys a private bank building. To continue the operations, its authority rent another building at an additional cost. The extra costs required to keep the bank running following a loss is a type of property loss.
Almost 85% of homeowners in the U.S. have homeowners insurance, and policies cost an average of 1,083 dollars per year. Unfortunately, according to a recent J.D. Power survey, 52% of homeowners doesn’t have a proper understanding of their coverage. Many insured people think that the amount of dwelling coverage they have, is associated with their home’s real estate market value when instead it’s associated with the home’s cost to rebuild.
Casualty insurance has a wide variety of basically unrelated insurance products due to which it is not easy to define. Liability insurance is one of the most important kinds of casualty insurance. Liability losses are losses that happen as a result of the insured’s communications with others or their property. Probably the best example of that would be a car accident.
Let’s say Roman is backing out of his driveway and hits John’s parked car, resulting in $400 of damage. Because Roman was at fault, he is legally liable for those damages, and he must provide money to get John’s car fixed. Liability insurance would shield Roman from having to pay for those losses out of his own pocket.
In order to be legally accountable, the person must generally be guilty of carelessness (the failure to use required care in personal actions). If negligence results in harm to another, the individual is responsible for the resulting damages. People in the insurance industry often call liability losses as third-party losses. The first party is the insured individual. The next party is insurance providing company. The person to whom the insured is answerable for damages is referred to as the third party.
Just like you can buy property insurance to protect yourself against financial loss if your property is damaged, you can buy liability insurance to protect yourself from financial loss if you become legally responsible for injury to another or damage to another’s assets. Although insurance for liability risks is an essential casualty coverage, there are many other kinds of insurance that have usually been considered as casualty insurance. Casualty insurance can also have the following types of insurance:
3. Workers’ compensation
4. Surety bonds
P & C Industry in US
According to S&P Global Market Intelligence, U.S. insurance market net premiums written figured 1.2 trillion dollars in 2017, with premiums recorded by life/health (L/H) insurers contributing 52 percent, and premiums by property/casualty (P/C) insurers contributing 48 percent. P/C insurance comprises mainly of auto, home, and commercial insurance. Net premiums written for the sector equaled 558.2 billion dollars in 2017. Although most private health insurance is written by organizations that specialize in that line of business, life/health, and property/casualty insurers also address this coverage, mentioned as accident and health insurance on their yearly statements. Total private health insurance direct written premiums were 867.5 billion dollars in the year 2017, including 670.1 billion dollars from the health insurance segment 190.8 billion dollars from the life/health segment and 6.5 billion dollars from property/casualty year-end statements, according to S&P Global Market Intelligence. In 2017, there were nearly 6000 insurance companies in the US. According to the National Association of Insurance Commissioners, these companies consisted of 2509 P/C, 852 life/annuities, 907 health, 82 fraternal, 58 title, 240 risk retention groups, and 1300 other organizations.
2.7 million people were provided employment by the US insurance industry in 2018, according to the US Department of Labor. Out of these employed people, 1.5 million worked for insurance companies, including 870,600 workers as life and health insurers, 621,800 workers as P/C insurers and 29,100 workers as reinsurers. The remaining 1.2 million comprised of workers for insurance agencies, brokers and other insurance associated businesses. According to S&P Global Market Intelligence, P/C cash and invested assets totaled 1.69 trillion dollars in 2017. The majority of these assets were in bonds out of which 58 percent were of P/C assets. P/C insurers paid out 101.9 billion dollars in property losses related to catastrophes in 2017, according to the Property Claims Services (PCS) division of Verisk Analytics, which was the highest since PCS began collecting insured loss data in 1949,101.9 billion dollars in losses in 2017 was 370 percent higher than 21.7 billion dollars in 2016. There were 46 calamities in 2017, in contrast with 42 in 2016.