Insurance

As a whole, the insurance industry is a trillion-dollar industry in the United States. According to S&P Global Market Intelligence, net insurance premiums written in the United States in 2021 totaled $1.4 trillion. S&P Global Market Intelligence also reported that property/casualty insurers accounted for 53 percent of this figure, while life/health insurers accounted for the remaining 47 percent.

According to the U.S. Department of Labor, 2.8 million people worked in the insurance industry in 2021. Most of these, 1.6 million people, worked for insurance companies (life, health and medical insurers [911,400 workers], property/casualty insurers [628,600 workers], and reinsurers [26,900 workers]). The remaining 1.2 people worked for insurance agencies, brokers, and other insurance-related companies. There were 5,929 insurance companies in the U.S. (including its territories) in 2021.

The industry is important to the U.S. economy. Total direct written premiums for the life/health and property/casualty sectors combined were $1.4 billion in 2021, according to the Insurance Information Institute (III). Insurance carriers and related activities contributed $674.2 billion, or 2.9 percent, to the nation’s gross domestic product (GDP) in 2021, according to the U.S. Bureau of Economic Analysis.

It is difficult, however, to define the status of the insurance industry overall, since each sector has its own issues, challenges, ups, and downs. For example, the health insurance industry was profoundly impacted by the Patient Protection and Affordable Care Act, which has helped 15 to 20 million Americans who previously were not covered obtain coverage, but which also featured poorly performing exchanges in some states and rising insurance premiums.

When it comes to property and casualty insurance, the industry has become deeply challenged by a growing number of natural disasters and calamities that have proven so costly that even companies with deep pockets are feeling the crunch. For example, Hurricanes Maria and Irma, which hit the U.S. and Caribbean in 2017, cost insurance companies an estimated $59 billion in claims (according to the Insurance Information Institute), and insurance claims (made between November 8, 2019, and January 17, 2020) from the vast wildfires that occurred in Australia reached $970 million, according to the Insurance Council of Australia.

Here is a look at the current status of each of the three primary sectors of the insurance industry, along with an overall view of jobs in that sector.

Health Insurance

The United States spends more on health-care expenses—an estimated $4.2 trillion in 2021—than any other developed country. The Organization for Economic Cooperation and Development (OECD) reports that the United States spends nearly twice as much as the average expenditures of OECD members. The United States is one of only a few developed countries that do not offer universal health coverage. Employer-funded coverage is the primary source of insurance in the United States, but companies say costly health insurance plans are having an impact on their competitiveness at a global level.

On June 29, 2012, The U.S. Supreme Court upheld President Barack Obama’s major health-care reform bill, the Patient Protection and Affordable Care Act. The act required Americans who were not exempt to purchase health insurance or pay a penalty, defined by the Supreme Court as a tax, which would be assessed on the person’s individual tax return and paid with his or her taxes. This portion of the act was repealed by Congress. At the same time, the act expands Medicare coverage to include all people earning 113 percent of the poverty-level income, and the government subsidizes premiums at varying levels for those earning between 113 percent and 400 percent poverty-level income. The act also requires online insurance exchanges. Insurance exchanges work in a similar manner as current online marketplaces, such as those used to shop for airplane tickets and hotels, where consumers can compare different plans’ coverage options and prices. Approximately 15 to 20 million previously uninsured Americans are currently covered under the act.

There were 1,127 health insurance companies in 2021 (up from 931 in 2018), according to the National Association of Insurance Commissioners. The top 10 health insurance groups by policies written in 2020 were:

1. UnitedHealthcare
2. Kaiser Foundation
3. Anthem, Inc.
4. Centene Corp.
5. Humana, Inc.
6. CVS
7. HCSC
8. Cigna Health
9. Molina Healthcare, Inc.
10. Independence Health Group

Property and Casualty Insurance

There were 2,422 property and casualty insurance companies in the industry in 2021, according to the National Association of Insurance Commissioners. This sector of the industry has been dealing with two primary challenges, both of which are due to the same cause: catastrophes. The United States has seen an increase in the number of floods, hurricanes, tornadoes, wildfires, earthquakes, and similar disasters, which have resulted in billions of dollars of claims.

Recent examples include Hurricanes Ian and Sandy. Hurricane Ian struck western Cuba, central Florida, and North Carolina and South Carolina in late September and early October 2022. Losses to insurers due to Ian were estimated at $52.5 billion, according to Aon plc, a global professional services firm. Hurricane Sandy devastated the northeastern coast, especially New Jersey and New York on October 29 and 30, 2012. Sandy caused $18.75 billion in insured property losses, excluding flood insurance claims covered by the federal flood insurance program, according to Property Claim Services, a division of Verisk Analytics. According to Munich RE, a reinsurance company, in 2022 alone, insured losses in North America for all natural disasters totaled $90 billion. In 2022, catastrophes worldwide caused an estimated $270 billion in economic losses. Approximately 45 percent of that total was insured.

“Overall losses were close to the average for the last five years, while insured losses were significantly above average (2017–2021: $ 97 billion), according to Munich Re. “The natural disaster figures for 2022 are dominated by events that, according to the latest research findings, are more intense or are occurring more frequently,” according to Thomas Blunck, a member of the Board of Management of Munich Re. “In some cases, both trends apply. Another alarming aspect we witness time and again is that natural disasters hit people in poorer countries especially hard. Prevention and financial protection, for example in the form of insurance, must therefore be given higher priority.”

Still, the news isn't all bad. Investment earnings in the insurance industry improved to $55.3 billion in 2018, up from $46.4 billion in 2014, while the value of net premiums written increased from $497.0 billion in 2014 to $1.4 trillion in 2021.

Insurance companies have struggled to maintain profitability as well as the level of cash reserves required by state insurance commissioners. In fact, with some smaller companies going out of business due to the extent of claims, insurance commissioners are increasing cash reserve levels. At the same time, companies have not seen the return on invested premiums they did prior to the recession, also affecting their profitability and cash reserves. This has led to an increase in mergers and acquisitions in the industry, as well as an increase in reinsurance (insurance companies basically insuring each other by contributing funds in the event of catastrophes).

Another way insurance companies have been trying to adjust to these catastrophes is to deny coverage to people who live in areas prone to these disasters, or significantly increase their premiums.

When it comes to jobs in this sector, human resources professionals like Gary Irvine, who served as the assistant vice president of talent management at Grange Insurance in Columbus, Ohio, for nearly 12 years, say that the commercial insurance lines will see the most growth in the number of jobs, while personal lines will decrease due to automation.

According to the Insurance Information Institute, the top 10 property and casualty groups by direct premiums written in 2022 were:

1. State Farm Mutual Automobile Insurance
2. Berkshire Hathaway, Inc.
3. Progressive Corp.
4. Allstate Corp.
5. Liberty Mutual
6. Travelers Companies, Inc.
7. Chubb Ltd.
8. USAA Insurance Group
9. Farmers Insurance Group of Companies
10. Nationwide Mutual Group

Life Insurance

There were 818 companies competing in the marketplace in 2021, according to the National Association of Insurance Commissioners. The life insurance industry was valued at $637.8 billion in 2021 (down from $679.4 billion in 2019), according to the Insurance Information Institute. Despite the growth in industry value, only 52 percent of Americans had life insurance in 2023 (down from 59 percent in 2020), according to LIMRA, which reports that about half of those with insurance were underinsured.

One of the biggest changes the life insurance industry has experienced over the last decade is an increase in annuity policies. “Traditional life insurance is no longer the primary business of many companies in the life/health insurance industry, according to the III. “Today, the emphasis has shifted to the underwriting of annuities.” Underwriting annuities accounted for 48 percent of life/annuity direct premiums written in 2021. Annuities are contracts with consumers that accumulate funds or pay out a fixed or variable income stream after the consumer has paid a number of premiums or fees. The income stream can be for a fixed period of time agreed upon by the consumer and company or over the lifetimes of the contract holder and his or her beneficiaries. While more traditional life insurance policies are still a mainstay of the market, with the growing number of elderly people in the United States, annuities have come to represent a significant share of the life insurance market.

When it comes to jobs in the life insurance industry, the employment trend will mirror that of the property and casualty industry. Computer automation has lead to a decrease in the number of claims processing, underwriting, and other administrative jobs, while commercial lines will see an increase in jobs.

According to the Insurance Information Institute, the top 10 life insurance companies by revenues in 2022 were:

1. MetLife, Inc.
2. Equitable Holdings
3. New York Life Insurance Group
4. Massachusetts Mutual Life Insurance Co.
5. Prudential Financial, Inc.
6. Athene Holding Limited
7. Nationwide
8. Western & Southern Financial
9. Corebridge Financial
10. Lincoln Financial