Insurance is a global business that significantly impacts economies, businesses, and individual lives. And, of the 33.2 million small businesses in the United States, 7 million currently depend on commercial insurance to continue operations. Inflation and natural disasters contributed to significant losses for the insurance industry and fraud continues to siphon off hundreds of billions of dollars annually.
Here are some business insurance statistics that show how vital and extensive the insurance industry is and how it is growing.
5 Business Insurance Statistics About the Economy
The conversation around the global economy is often on trade surpluses and trade deficits. However, insurance is a significant part of the worldwide economy contributing domestically and internationally.
$5.2 Trillion • Gross Insurance Premiums Worldwide
Insurance is a global industry. $5.2 trillion represents premiums for all forms of insurance for members of the Organisation for Economic Co-operation and Development (OECD).
9.45% • Total GDP for All OECD Countries
$5.2 trillion represents, on average, nearly 10% of the gross domestic product (GDP) of all OECD member countries. Since insurance is an industry that impacts many sectors, such as auto repair, auto sales, home repair, medical workers, and pharmaceuticals, insurance fills a large spot in a country’s GDP.
$1 Trillion • US Premium
Considering the size of the OECD’s membership, it is safe to say that insurance is a major part of the US market since one-fifth of its contribution to the global market takes place in the US. There are approximately 7,000 insurance companies in the US, and these companies collect an average of $1 trillion in written premiums annually.
56.2% • US Percentage of OECD
While insurance is global, the US market dominates by occupying more than half of gross premiums for members of the OECD.
12.53% • Total GDP for US Economy
Insurance for personal lines and commercial lines is an important part of the American economy. This may be because, while it is a commodity, many governments mandate the purchase of it, such as personal auto, and workers’ compensation. In 2021, insurance occupied over 10% of the US GDP. This includes $314 billion in insurance premiums paid by small businesses.
10 Insurance Industry Statistics About Premiums
While money can’t buy happiness, you can purchase peace of mind with insurance. These nine statistics show that the cost of that peace of mind is rising. The main takeaway from these statistics is that the cost of insurance continues to rise.
8.6% • Premium Increase in 2022
Property and casualty insurance increased by 8.6% from 2021. Commercial premiums increased on average by 8% across all commercial lines. Unfortunately for small business owners, this makes 21 consecutive quarters with an increase in the premium pricing.
Double-Digit Increases • Personal Auto in 2023
According to S&P research, personal auto premiums in the US are seeing an increase in double-digits. The rate of increase varies by state, but Nevada had the highest increase, with Geico premiums rising by 53.8%. The main drivers for the increase are high losses from inflationary costs, and supply chain issues.
16% • Commercial Property Premium Increase
Out of all the commercial insurance lines, commercial property saw the highest increase in average premiums. Commercial property rose 16% in 2022. The increase was driven primarily by construction costs related to inflation.
As a small business owner, there isn’t much you can do in this scenario if you own the property. However, if you are thinking of starting a business, it may be more economical to rent a space than to purchase one that will then need to be insured.
3.5% • Premium Increase for Product Liability
In 2021, the total premium spent on product liability insurance, a very important coverage to have, is $3.353 million. This is an increase of 3.5% from 2020, and 3.5% is in keeping with the general overall cost inflation for the same time period.
13% • Premium Increase for Directors & Officers (D&O) Insurance
D&O insurance increased by 13% in 2021, the second-highest premium increase in commercial lines. D&O insurance is only necessary for companies that have a governing structure with key players involved.
Commercial umbrella insurance grew the most at around 20%. However, an umbrella policy is never a bad idea. Before purchasing an umbrella policy, it is worth seeing if it is more economical to raise the limits on your liability policy.
$1.35 Trillion • Total Premiums in the US
Property and Casualty premiums are 53% of total premiums in the US. Life insurance and annuities fill out the other half, contributing $635.7 billion. Total premiums paid in the US are $1.351 trillion.
50.2% • Total Commercial Lines Premium
In the US market, personal lines (auto and homeowners) represent 49.8% of all premiums, or $356.3 billion. Commercial lines account for 50.2%, or $359.6 billion.
This isn’t surprising since small businesses are the backbone of nearly every state’s economy. For example, Texas’ 3.1 million small businesses employ 4.9 million employees.
38 • Consecutive Quarters of Premium Rate Increase
If your business has a commercial auto policy, you are probably already aware that the price goes up yearly. Q4 of 2021 saw an increase of 8% for commercial auto, marking 38 consecutive quarters with rate increases.
6.2% • Total Net Premiums
Workers’ compensation insurance is the second largest commercial line, with 6.2% of total net premiums in 2021. Workers’ compensation is the only commercial line that can be a required product to purchase, depending on the state laws.
However, liability is often required by landlords to rent a property and of vendors to sell products and is a valuable line of insurance for protecting your assets. So it isn’t surprising that other liability, encompassing multiple liability insurance products, is the largest commercial line.
18.7% • Total Market Share
The top three providers for workers’ compensation insurance—Travelers, The Hartford, and AmTrust—account for 18.7% of the total market share.
4 Statistics on Insurance Industry Demographics
Insurance is for everyone, so it makes sense that the insurance industry should be diverse and reflect the population. These four statistics will show you how the industry is doing.
1.6 Million • Insurance Carrier Employees
In 2021, there were 628,600 employees in property & casualty, 911,400 in life insurance, and another 26,900 with reinsurance carriers. Including agencies, brokers, and related services, there were 2.8 million employees in the industry.
9% • Increase in Employment
Insurance brokers and agencies are expected to grow by 9% by 2024. Similar to workers’ comp, insurance is a commodity that comes with a legal requirement to purchase. Therefore, it can weather economic downturns much better than other industries.
While agencies and brokers are expected to grow, the industry is struggling right now with a number of larger companies, like Farmers Insurance, laying off large numbers of its workforce.
50% • Agents Are Female
In the US, 50% of the agents are female, and 58.2% of claims service professionals are women. However, only 11.8% of agents (male or female) are African American, and 16% (male or female) are Hispanic or Latino.
47% • Insurance Employees Are Female
Just under half of the insurance employees are female. Female representation is the highest for claims and policy processing clerks, with 78.2% of female employees.
11 Small Business Insurance Claims Statistics
Unfortunately, at some point in time, your business will experience a loss and you will need to file a claim. Claims can be costly both for your business—in terms of deductibles and any out-of-pocket expense that isn’t covered—and for the insurance company.
40% • Chance a Small Business Will File a Claim
A widely cited study by The Hartford found that 40% of small business owners will file a claim within 10 years. The claim may be a property or liability loss.
$300 Million • Large Loss Fire Loss
Seven of the top 10 large loss fires in 2020 are related explicitly to commercial losses. Of those, the largest was a fire in a warehouse for online sales. The estimated loss for that fire was $300 million.
Every 23 Seconds • Fire Occurs
In 2021, it was reported that fire departments responded to the report of a fire every 23 seconds. Fire losses were up 2.6% in 2020 for commercial lines.
While commercial property insurance premiums may be on the rise, the risk of a fire is significant and could result in the total loss of your property.
$7 Million • Product Liability Jury Awards
In 2020, for product liability injury claims that went to trial and received a verdict from a jury, the average award was $7,058,106. This is significantly higher than the average award for general business negligence, which was $3,110,297, and highlights the importance of carrying this coverage if your business is involved in production.
68% • Increase in Data Compromises From 2021 to 2020
Cybersecurity is increasingly crucial in an age when everyone’s essential data is in the cloud. The average data breach cost rose from $3.86 million to $4.24 million in 2021, with a 68% increase in data compromises.
48% • Firms Hit With Cyberattack in 2022
A study by insurer Hiscox found that the proportion of firms attacked increased from 43% in 2021 to 48% in 2022. One in five businesses attacked stated the survival of their firm was threatened. This highlights the increasing importance of cyber liability insurance.
$17,000 • Median Cost of Cyber Claim in 2022
The median cost of a cyber claim was just over $17,000. This represents an increase of 29% since 2021. An unexpected expense for a small business of nearly $20,000 is not one any business wants to have. The high cost of cyber claims shows the importance of having a quality cyber insurance policy.
6% • Increase in Costly Cyberattacks
In the US, cyber-attacks that cost at least $25,000 have increased in frequency from 34% to 40%. Not surprisingly, one in five firms that experienced a cyberaattack felt that their solvency was threatened.
Burglary and Theft • Most Common Claim
Frankenmuth Insurance states that burglary and theft are the most common business claims. This is followed by water-related damage, wind and hail, fire damage, and slip and fall claims.
$24.6 Billion • Underwriting Loss
2022 saw the worst year of natural disaster losses for insurance since 2011. The industry experienced a loss of 424.6 billion due primarily to natural disasters and inflation.
Fatal Workplace Injuries Continue to Rise
There were 5,190 fatal workplace injuries in 2021. This is an increase of 8.9% from 2020. This number means that every 101 minutes a worker dies from a work-related injury which is the highest occupational injury rate since 2016.
6 Personal Lines Claims Statistics
Insurance isn’t just for your business but all aspects of your life. These statistics show how important insurance is for your home and car.
97.7% • Homeowners Claims Are Property Damage
97.7% of homeowners claims were for property damage. This includes 0.6% of the claims for theft. Only 2.3% of claims filed were for liability.
$77,340 • Average Cost of Most Expensive Homeowners Claim
According to the above report, fire, and lightning were the most expensive homeowners claims ($77,340). Liability claims averaged $30,324.
While there are steps you can, as well as should, take to reduce the likelihood of a claim, completely avoiding a fire or lightning strike, or even a visitor tripping and falling, is impossible. The costs of the loss again highlight the importance of maintaining an active policy.
1 in 20 • Homeowners File a Claim
The frequency of claims filed means that, on average, one in 20 homeowners will file a claim every year. This is why insurance is so important.
$90 Billion • Homeowners Loss
2022 was difficult for insurance companies across all lines. Homeowners insurance was unprofitable for the third year in a row and spent approximately $90 billion on claims from natural disasters.
Less than 80% • of Auto Owners have ‘Full Coverage’
While “full coverage” is not an actual coverage selection, policyholders using this typically mean their vehicle has collision and comprehensive coverage. However, less than 80% of auto owners have those two coverages.
$96 Million • Incurred Auto Loss
In 2021, the total incurred loss for liability coverage was $96,104,094. The physical damage was $73,846,463.
6 Insurance Fraud Statistics
Insurance fraud is a serious problem in the US. Sometimes, fraud is perpetrated by an insurance fraud criminal organization and, sometimes, it is “soft” fraud, like lying on your application about your claims history. But either way, it is costly for the industry. Nearly every state and the federal government devote resources to investigating insurance fraud.
$308.6 Billion • Insurance Fraud Committed Annually
It is estimated that insurance fraud costs consumers and businesses approximately $308.6 billion annually. On the personal level, this translates into between $400 to $700 a year in premiums for the average family.
Insurance Fraud By the Numbers
Of the above $308 billion $45 billion is in the property and casualty space and $34 billion is workers’ compensation fraud. Of the $45 billion committed in property and casualty, $7.4 billion is related to auto theft claims.
$8,898 • Acts of Arson
In 2020, there were nearly 9,000 autos intentionally set on fire.
22% • Policyholders Admit to Lying
Insurance fraud takes a number of forms. One form is a type of material misrepresentation when applying for auto insurance that can include lying about damage to your vehicle and claims history of the number of drivers living in the home to get a lower premium. 22% of auto policyholders admit to lying to their insurer about details that may hurt their premiums.
88.6% • No Prior Criminal history
Insurance fraud isn’t limited to organized crime. Out of 64,142 cases of healthcare fraud reported to the US Sentencing Commission in 2022, 88.6% of the offenders had little or no prior criminal history.
$416 Million • Recovered
The Medicaid Fraud Control Unit recovered $416 million in 2022. Much of the fraud for Medicaid comes from billing for services that are not provided or for patients not eligible for that type of care.
4 US Insurance Industry Statistics
Unfortunately, because most policies carry a communicable disease exclusion, many business owners learned the hard way there was no coverage for COVID-19-related losses. But this doesn’t mean there wasn’t an impact on the insurance industry from the pandemic. While the actual cost and long-term consequences are still being assessed, here are some key insurance statistics we know about COVID-19 and the insurance industry.
$10.5 Billion • Premium Returned
Because of the global lockdown, auto insurers returned over $10 billion to customers through premium reimbursements. Insurers also pledged more than $200 million to national and local organizations handling the pandemic-related problems.
$90 Billion • Life Insurance Claims Paid
According to the American Council of Life Insurers, life insurance companies paid more than $90 billion in 2020. This is the highest recorded amount for a single year.
19% • Increase in Life Insurance Policies
While the life insurance industry paid out a record amount, sales of life insurance policies grew by 19% from 2019 to 2020.
30% • Small Business Owners Who Are Uninsured
According to a Next Insurance survey, nearly 30% of small businesses are uninsured. Of those who do carry insurance, 90% lack confidence that they have enough coverage for their business.
Frequently Asked Questions (FAQs)
Since 2006, most commercial policies have had a virus and bacteria exclusion in place[1], meaning there is no coverage for COVID-19-related losses. This is an ongoing issue—insurers are arguing covering losses related to a pandemic would bankrupt them and a program similar to TRIA needs to be established.
By revenue, the top insurance company in 2021 is Berkshire Hathaway[2]. The second largest is Ping An Insurance, a life insurance company.
Measured by direct written premiums in 2021, State Farm is the largest personal auto insurer. Berkshire Hathaway and Progressive Corp. are second and third, respectively[3].
Using the measurement of direct written premiums, Chubb Ltd. is the largest US insurer for commercial lines in 2021. Travelers Companies Inc. and Liberty Mutual follow it[3].
Bottom Line
These key business insurance statistics show the importance—and cost—of insurance. For its contribution to the economy, insurance is an important industry on the local, national, and global levels. While premiums are increasing, the cost of claims also continues to rise, and the cost of not having insurance is too great to leave to chance.
FAQs sources:
1Business Interruption Insurance and COVID-19
2Rankings | III
3Facts + Statistics: Insurance company rankings | III
