A Firm Foundation The Insurance Industry

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A Firm Foundation The Insurance Industry Its
Contributions to Society
St. Johns University School of Risk Management,
Insurance Actuarial Science New York,
NY April 10, 2008
Robert P. Hartwig, Ph.D., CPCU,
President Insurance Information Institute ? 110
William Street ? New York, NY 10038 Tel (212)
346-5520 ? Fax [phone] ? bobh_at_iii.org ?
www.iii.org
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Key Roles Insurers Play in Society

• Insurers as Claims Payers
• Philanthropists
• Contributors to the Economy
• Employers
• Taxpayers
• Investors
• Educators
• Promoters of Public Safety
• Builders in Times of Greatest Need Catastrophes

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INSURERS AS CLAIMS PAYERSTrillions and
Trillions Paid( Counting)
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Incurred Losses, Property/Casualty Insurance
2000-2007
billions
P/C insurers paid out 275 billion each year on
average to millions of people and businesses
since 2000.
Losses occurring within a fixed period whether
or not adjusted or paid during the same period,
on a direct basis before reinsurance. Sources
NAIC Annual Statement Database, via Highline
Data, LLC, ISO. Insurance Info. Institute
http//www.iii.org/economics/toc/
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Cumulative Incurred Losses, P/C Insurance
2000-2007
Billions
P/C insurers paid more that 2.2 trillion in
claims to tens of millions of people and
businesses since 2000
Losses occurring within a fixed period whether
or not adjusted or paid during the same period,
on a direct basis before reinsurance. Sources
NAIC Annual Statement Database, via Highline
Data, LLC, ISO. Insurance Info. Institute
http//www.iii.org/economics/toc/
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Life Insurance Claims Benefits Paid, 2000-2006
Billions
Life insurers paid more than 2.3 trillion in
claims and benefits between 2000 and 2006
On a direct basis before reinsurance. Sources
NAIC Annual Statement Database, via Highline
Data, LLC Insurance Info. Institute.
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Share of Losses Paid by Reinsurers, by Disaster
Reinsurance is playing an increasingly important
role in the financing of mega-CATs Reins. Costs
are skyrocketing
Excludes losses paid by the Florida Hurricane
Catastrophe Fund, a FL-only windstorm reinsurer,
which was established in 1994 after Hurricane
Andrew. FHCF payments to insurers are estimated
at 3.85 billion for 2004 and 4.5 billion for
2005. Sources Wharton Risk Center, Disaster
Insurance Project Insurance Information
Institute.
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INSURERS AS PHILANTHROPISTSInsurers are
Generous withTheir Money and Time
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Insurance Industry Charitable Contributions to
U.S. Beneficiaries, 2006
Millions
In 2006, the insurance industrys donations to
U.S. beneficiaries totaled 147.1 million,
placing it among the top 15 contributors among
large U.S. corporations.
Sources The Conference Board Insurance Info.
Institute http//www.iii.org/economics/toc/
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Top 10 Total Contributions Per Worldwide Employee
By Industry, 2005
Charitable contributions per employee totaled
560 in 2005, 7th highest of any industry
Companies not reporting worldwide employee
figures are excluded. Includes other
diversified manufacturing. Sources The
Conference Board Insurance Info. Institute
http//www.iii.org/economics/toc/
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INSURERS AS CONTRIBUTORS TO THE ECONOMYInsurers
are an Important Segment of the Economy
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Insurance Sectors Share of Gross Domestic
Product (GDP), 2001-2005
Insurance GDP
The insurance industry accounted for nearly 300
billion or 2.4 of US GDP in 2005
Source Insurance Information Institute
http//www.iii.org/economics/toc/
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INSURERS AS EMPLOYERSGood Jobs, Good Pay
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Insurance Carriers Employment and Payroll,
2000-2007
Insurers employed more than 2.3 million people in
2007, with total wages approaching 200 billion.
Source U.S. Dept. of Labor, Bureau of Labor
Statistics U.S. Dept. of Commerce, Bureau of
Economic Analysis Insurance Information
Institute.
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INSURERS AS TAXPAYERSInsurers are a Major
Source of Government Revenue
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Insurance Industry Taxes Paid and Incurred,
2002-2006
P/C and Life insurers paid 174 billion in taxes
between 2002 and 2006
Based on page 3, Annual Statement, Liabilities,
Surplus and Other Funds. Sources Insurance Info.
Institute http//www.iii.org/economics/toc/
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INSURERS AS INVESTORSInsurers are a Among
theLargest Investors in the World
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Insurance IndustryTotal Financial Assets,
2002-2006
billions
Insurers are among the largest investors in the
world, facilitating global growth in the private
and public sectors
Sources Board of Governors of the Federal
Reserve System Insurance Info. Institute
http//www.iii.org/economics/toc/
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Selected Insurance IndustryFinancial Assets, 2006
billions
As the worlds largest muni bond investor,
insurers fund hundreds of billions of dollars in
state and local projects such as schools, roads
and health care
Sources Board of Governors of the Federal
Reserve System Insurance Info. Institute
http//www.iii.org/economics/toc/
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INSURERS AS EDUCATORSEducated Consumers
Makethe Best Customers
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Free Home Inventory Software 400,000 downloads
and counting!
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Helping businesses learn their insurance needs
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Spanish language information
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Information Research
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INSURERS AS PROMOTERS OF PUBLIC
SAFETYInvestments in Public Safety Security
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INSURERS AS BUILDERS IN TIMES OF GREATEST
NEEDCatastrophic Losses Insurers Most
Critical Job
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Most of US Population Property Has Major CAT
Exposure
Is Anyplace Safe?
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U.S. Insured Catastrophe Losses
Billions
100 Billion CAT year is coming soon
2006/07 were welcome respites. 2005 was by far
the worst year ever for insured catastrophe
losses in the US, but the worst has yet to come.
Excludes 4B-6b offshore energy losses from
Hurricanes Katrina Rita. Note 2001 figure
includes 20.3B for 9/11 losses reported through
12/31/01. Includes only business and personal
property claims, business interruption and auto
claims. Non-prop/BI losses 12.2B. Source
Property Claims Service/ISO Insurance
Information Institute
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Catastrophe Claims and Lossesin the U.S.,
2000-2007
Insurers paid 155 billion in catastrophe losses
on 18.3 million claims arising from 192 events
between 2000 and 2007
Source ISOs Property Claim Services Unit
Insurance Information Institute
http//www.iii.org/economics/toc/
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States With Largest Insured Catastrophe Losses in
2007

• 2007 CAT STATS
• 1.18 million CAT claims across 41 states arising
• 23 catastrophic events

Source PCS/ISO Insurance Information Institute.
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Distribution of 2007 US CAT Losses, by Type and
Insured Loss
Billions
Personal (home, condo, rental, contents etc.)
accounted for 68 of all US insured CAT losses
paid in 2007. CAT claim count was 1.18 million.
Source PCS division of ISO.
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Top Catastrophic Wildland Fires In The United
States, 1970-2007
Insured Losses (Millions 2007 )
Fourteen of the top 17 catastrophic wildfires
since 1970 occurred in California
Estimate from CA Insurance Dept., Jan. 10, 2008.
Source ISO's Property Claim Services Unit
California Department of Insurance Insurance
Information Institute.
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Inflation-Adjusted U.S. Insured Catastrophe
Losses By Cause of Loss, 1987-2006¹
Insured disaster losses totaled 297.3 billion
from 1987-2006 (in 2006 dollars). Wildfires
accounted for approximately 6.6 billion of
these2.2 of the total.
1 Catastrophes are all events causing direct
insured losses to property of 25 million or more
in 2006 dollars. Catastrophe threshold changed
from 5 million to 25 million beginning in 1997.
Adjusted for inflation by the III. 2 Excludes
snow. 3 Includes hurricanes and tropical storms.
4 Includes other geologic events such as volcanic
eruptions and other earth movement. 5 Does not
include flood damage covered by the federally
administered National Flood Insurance Program. 6
Includes wildland fires.
Source Insurance Services Office (ISO)..
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Catastrophic Hurricane Claims and Losses in the
U.S., 1998-2005
Insurers paid 89.1 billion in hurricane losses
on 7.7 million claims between 1998 and 2005
Source ISOs Property Claim Services Unit
Insurance Information Institute
http//www.iii.org/economics/toc/
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Global Insured Catastrophe Losses by Region,
2001-2007
Billions
North America accounted for 70 of global
catastrophe losses 2001-2007
Notes 2001-03 figures for N. America include US
only. 2001 figure includes only property losses
from 9/11. Source Insurance Information
Institute compiled from Swiss Re sigma issues.
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HURRICANE KATRINARebuilding Communities Lives
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Top 10 Most Costly Hurricanes in US History,
(Insured Losses, 2005)
Seven of the 10 most expensive hurricanes in US
history occurred in the 14 months from Aug. 2004
Oct. 2005 Katrina, Rita, Wilma, Charley, Ivan,
Frances Jeanne
Sources ISO/PCS Insurance Information
Institute.
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Insured Loss Claim Count for Major Storms of
2005
Hurricanes Katrina, Rita, Wilma Dennis produced
a record 3.3 million claims
Property and business interruption losses only.
Excludes offshore energy marine losses. Source
ISO/PCS as of June 8, 2006 Insurance Information
Institute.
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Hurricane Katrina Claim Status on Storms 1st
Anniversary
95 of the 1.2 million homeowners insurance
claims in Louisiana Mississippi are settled,
with just 2 in dispute
Hurricane Katrina made its north Gulf coast
landfall August 29, 2005. Source Insurance
Information Institute survey, August 2006.
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Hurricane Katrina Claim Status on Storms 2nd
Anniversary
99 of the 1.2 million homeowners insurance
claims in Louisiana Mississippi were settled as
of the storms second anniversary in 2007
Hurricane Katrina made its north Gulf coast
landfall August 29, 2005. Unsettled implies
that the claim is in the process of settlement,
involved in mediation or litigated. Source
Insurance Information Institute survey, August
2007.
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Hurricane Katrina Insured Loss Distribution by
State ( Millions)
Mississippi accounted for 33.5 of the insured
losses paid and 29.5 of the claims filed
Total Insured Losses 40.579 Billion
As of June 8, 2006 Source PCS division of ISO.
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Growth in Mississippi Construction Component of
GDP Pre/Post-Katrina
Insurance dollars helped construction spending
surge in MS
Sources US Bureau of Economic Analysis
Insurance Information Inst.
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Insured Offshore Energy Losses for Recent Major
Gulf Storms
Hurricanes Katrina, Rita and Ivan cost energy
insurers at least 7 billion
Sources Insurance Information Institute research
estimates. Midpoint of estimated range for
2.0 to 2.5 billion)
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