What Really Keeps Insurance
CEOs Awake at Night?
Trends, Challenges & Opportunities
Ole Miss Insurance Symposium
Oxford, MS
March 19, 2015
Download at www.iii.org/presentations
Robert P. Hartwig, Ph.D., CPCU, President & Economist
Insurance Information Institute  110 William Street  New York, NY 10038
Tel: 212.346.5520  Cell: 917.453.1885  bobh@iii.org  www.iii.org
PROFITABILITY
Consistent Profitability Is the Top
Concern of All CEOs
2
$50,203
$63,784
$33,522
$19,456
$3,043
$28,672
$35,204
$62,496
Net income rose
strongly (+81.9%)
in 2013 vs. 2012
on lower cats,
capital gains
$44,155
$38,501
$30,029
$20,559
$21,865
$30,773
$20,598
$10,870
$3,046
$10,000
$19,316
$20,000
$5,840
$30,000
$14,178
$40,000
$36,819
2005 ROE*= 9.6%
2006 ROE = 12.7%
2007 ROE = 10.9%
2008 ROE = 0.1%
2009 ROE = 5.0%
2010 ROE = 6.6%
2011 ROAS1 = 3.5%
2012 ROAS1 = 5.9%
2013 ROAS1 = 10.3%
2014 ROAS1 = 7.6%
$24,404

$ Millions 
$80,000 

$70,000 

$60,000 

$50,000 

$65,777
P/C Industry Net Income After Taxes
1991–2014E
$0
•ROE figures are GAAP; 1Return on avg. surplus. Excluding Mortgage & Financial Guaranty insurers yields a 7.7% ROAS through
2014:Q2, 9.8% ROAS in 2013, 6.2% ROAS in 2012, 4.7% ROAS for 2011, 7.6% for 2010 and 7.4% for 2009.
Sources: A.M. Best, ISO; Insurance Information Institute
14E
13
12
11
10
09
08
07
06
05
04
03
02
01
99
98
97
96
95
94
93
92
91
00
-$6,970
-$10,000
Life/Annuity Industry Profits, 2001-2013
$43.2
$40.9
$14.4
$28.1
$21.5
$31.6
$37.0
$36.6
$25.9
$3.6
$25
$11.0
$50
$32.5
Billions
$75
$0
($25)
-$52.3
($50)
($75)
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
The Life/Annuity industry has produced steady (if unspectacular) profits,
except for years in which the industry’s investment results produced
significant realized capital losses.
Sources: NAIC, via SNL Financial; Insurance Information Institute.
4
Profitability Peaks & Troughs in the P/C
Insurance Industry, 1975 – 2016F
ROE
25%
1977:19.0%
History suggests next ROE
peak will be in 2016-2017,
but that seems unlikely
1987:17.3%
20%
1997:11.6%
2006:12.7%
2013
10.4%
15%
9 Years
2015F=6.5%
2016F=6.3%
10%
5%
2014E
7.6%
0%
1975: 2.4%
1984: 1.8%
1992: 4.5%
2001: -1.2%
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15F
16F
-5%
*Profitability = P/C insurer ROEs. 2011-14 figures are estimates based on ROAS data. Note: Data for 2008-2014 exclude
mortgage and financial guaranty insurers.
Source: Insurance Information Institute; NAIC, ISO, A.M. Best, Conning
ROE: Property/Casualty Insurance by
Major Event, 1987–2014E
(Percent)
P/C Profitability Is Both by
Cyclicality and Ordinary Volatility
20%
Modestly
higher
CATs
Katrina,
Rita, Wilma
Low
CATs
15%
10%
Sept. 11
5%
0%
Hugo
Lowest CAT
Losses in
15 Years
Andrew
4 Hurricanes
Northridge
Financial
Crisis*
Sandy
Record
Tornado
Losses
-5%
87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14*
* Excludes Mortgage & Financial Guarantee in 2008 – 2014. 2014 figure is through Q3:2014.
Sources: ISO, Fortune; Insurance Information Institute.
8
Back to the Future: Profitability Peaks & Troughs
in the P/C Insurance Industry, 1950 – 2014*
1970-90: Peak ROEs were much
higher in this period while troughs
were comparable. High interest
rates, rapid inflation, economic
volatility all played roles
ROE
1950-70: ROEs were lower in
this period. Low interest rates,
low inflation, “Bureau” rate
regulation all played a role
25%
1990-2010s: Déjà vu.
Excluding megaCATs, this period is
very similar to the
1950-1970 period
1977:19.0%
20%
1987:17.3%
2006:12.7%
1972:13.7%
1997:11.6%
15%
2013
10.4%
1950:8.0%
10%
1959:6.8%
1966-67:
5.5%
5%
2014:H1
7.6%
1969: 3.9%
1992: 4.5%
*Profitability = P/C insurer ROEs. 2011-14 figures are estimates based on ROAS data. Note: Data for 2008-2014 exclude
mortgage and financial guaranty insurers. 2014 figure is through Q3.
Source: Insurance Information Institute; NAIC, ISO, A.M. Best.
14E
12
10
08
06
04
02
00
98
96
94
2001: -1.2%
92
90
88
86
84
82
80
78
76
74
72
70
68
66
64
60
58
56
54
52
50
-5%
1984: 1.8%
1975: 2.4%
1965: 2.2%
1957: 1.8%
62
0%
Return on Net Worth (RNW) All Lines:
2004-2013 Average
25.6
30
Commercial lines have tended
to be more profitable than
personal lines over the past
decade
18.4
25
6.6
7.1
7.1
-1.0
0
4.9
5
7.8
7.9
10
8.9
9.2
15
13.2
13.4
20
in
es
th
er
Li
ab
ili
W
ty
or
ke
rs
C
om
PP
p
A
ut
o
H
To
om
ta
eo
l
w
ne
rs
Fa
M
rm
P
ow
ne
rs
M
P
A
lli
ed
Li
ne
s
O
A
ll
L
M
P
To
t
C
om
m
ut
o
A
er
ci
al
al
y
ia
bi
l it
om
m
C
ro
fL
th
er
ll
O
ed
ic
al
P
A
M
In
la
nd
M
Fi
re
ar
in
e
-5
Source: NAIC; Insurance Information Institute.
10
RNW All Lines by State, 2004-2013 Average:
Highest 25 States
18.4
20.5
Profitability Benchmark: All P/C
9.5
9.6
9.8
9.8
9.9
10.3
10.5
10.5
10.7
10.7
10.8
10.9
11.1
11.1
11.4
11.7
12.0
12.0
12.1
12.3
13.3
13.4
14.3
US: 7.9%
14.6
24
22
20
18
16
14
12
10
8
6
4
2
0
The most profitable states
over the past decade are
widely distributed
geographically, though none
are in the Gulf region
HI AK VT ME WY ND VA ID NH UT WA SC MA NC OH DC CA OR RI WV CT IA NE SD MT MD
Source: NAIC; Insurance Information Institute.
11
NM FL TX WI KS MN CO PA US AR IL
Source: NAIC; Insurance Information Institute.
-9.3
-6.9
Some of the least
profitable states over the
past decade were hit hard
by catastrophes
1.9
2.5
4.3
5.0
5.2
5.3
5.7
6.1
6.4
6.6
6.8
7.4
7.5
7.7
7.7
7.9
8.0
8.1
8.2
8.2
8.3
8.4
8.6
10
8
6
4
2
0
-2
-4
-6
-8
-10
-12
-14
9.2
RNW All Lines by State, 2004-2013 Average:
Lowest 25 States
IN AZ MO KY TN NV NJ GA NY DE MI AL OK MS LA
12
Profitability in Mississippi’s
P/C Insurance Markets
Analysis by Line and Nearby
State Comparisons
14
RNW All Lines: MS vs. U.S., 2004-2013
(Percent)
40%
20%
0%
-20%
-40%
-60%
P/C Insurer profitability in
MS is below that of the US
overall over the past decade
US: 7.9%
MS: -6.9%
-80%
-100%
-120%
Katrina
-140%
-160%
-180%
04
05
06
US All Lines
Sources: NAIC.
07
08
09
10
11
12
13
MS All Lines
15
RNW PP Auto: MS vs. U.S., 2004-2013
20%
15%
10%
5%
0%
-5%
Average 2004-2013
-10%
US: 7.1%
-15%
MS: 4.5%
Katrina
-20%
-25%
04
05
06
US PP Auto
Sources: NAIC.
07
08
09
10
11
12
13
MS PP Auto
16
RNW Homeowners: MS vs. U.S.,
2004-2013
(Percent)
50%
0%
-50%
-100%
-150%
-200%
Average 2004-2013
-250%
US: 6.6%
Katrina
-300%
MS: -25.8%
-350%
-400%
04
05
06
US HO
Sources: NAIC.
07
08
09
10
11
12
13
MS HO
19
RNW Workers Comp: MS vs. U.S.,
2004-2013
(Percent)
Average 2004-2013
14%
US: 7.1%
12%
MS: 7.3%
10%
8%
6%
4%
2%
0%
04
05
06
US WComp
Sources: NAIC.
07
08
09
10
11
12
13
MS Wcomp
20
All Lines: 10-Year Average RNW MS &
Nearby States
2004-2013
Louisiana
-9.3%
-6.9%
Mississippi
2.5%
Alabama
5.3%
Mississippi All Lines
profitability is below the
US and the regional
average
Georgia
6.4%
Tennessee
7.9%
U.S.
8.6%
Florida
-15%
-10%
-5%
0%
Source: NAIC, Insurance Information Institute
5%
10%
Homeowners: 10-Year Average RNW
MS & Nearby States
2004-2013
Mississippi
-25.8%
-19.6%
Louisiana
-13.1%
Alabama
-10.2%
Mississippi
Homeowners
profitability is below the
US average and below
the regional average
-30%
-20%
Tennessee
-8.2%
Georgia
-0.4%
Florida
6.6%
U.S.
-10%
Source: NAIC, Insurance Information Institute
0%
10%
Top Ten Most Expensive And Least Expensive
States For Homeowners Insurance, 2012 (1)
Mississippi ranked as the 5th most expensive state for homeowners
insurance in 2012, with an average expenditure of $1,314.
Rank
Most
expensive states
HO average
premium
Rank
Least
expensive states
HO average
premium
1
Florida
$2,084
1
Idaho
$538
2
Louisiana
1,742
2
Oregon
567
3
Texas
1,661
3
Utah
580
4
Oklahoma
1,501
4
Wisconsin
631
5
Mississippi
1,314
5
Washington
648
6
Alabama
1,248
6
Nevada
674
7
Rhode Island
1,233
7
Delaware
678
8
Kansas
1,213
8
Arizona
691
9
Connecticut
1,160
9
Ohio
721
10
New York
1,158
10
Maine
741
(1) Includes policies written by Citizens Property Insurance Corp. (Florida) and Citizens Property Insurance Corp. (Louisiana), Alabama Insurance
Underwriting Association, Mississippi Windstorm Underwriting Association, North Carolina Joint Underwriting Association and South Carolina
Wind and Hail Underwriting Association. Other southeastern states have wind pools in operation and their data may not be included in this chart.
Based on the HO-3 homeowner package policy for owner-occupied dwellings, 1 to 4 family units. Provides “all risks” coverage (except those
specifically excluded in the policy) on buildings and broad named-peril coverage on personal property, and is the most common package written.
(2) The Texas Department of Insurance developed home insurance policy forms that are similar but not identical to the standard forms. In addition,
due to the Texas Windstorm Association (which writes wind-only policies) classifying HO-1, 2 and 5 premiums as HO-3, the average premium for
homeowners insurance is artificially high.
Note: Average premium=Premiums/exposure per house years. A house year is equal to 365 days of insured coverage for a single dwelling. The NAIC
does not rank state average expenditures and does not endorse any conclusions drawn from this data.
Source: ©2014 National Association of Insurance Commissioners (NAIC). Reprinted with permission. Further reprint or distribution strictly prohibited
without written permission of NAIC.
27
GROWTH
Growth (Preferably Profitable) Is a
Top Priority of Most CEOs
Growth in Many Insurance Lines Is
Volatile and Cyclical
29
Net Premium Growth: Annual Change,
1971—2016F
(Percent)
1975-78
1984-87
25%
2000-03
Net Written Premiums Fell
0.7% in 2007 (First Decline
Since 1943) by 2.0% in 2008,
and 4.2% in 2009, the First 3Year Decline Since 1930-33.
20%
2015-16F:
4.0%
15%
2014E: 3.9%*
2013: 4.6%
10%
2012: +4.3%
5%
0%
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15F
14F
-5%
*Actual figure based on data through Q3 2014.
Shaded areas denote “hard market” periods
Sources: A.M. Best (historical and forecast), ISO, Insurance Information Institute.
30
NPW Premium Growth: Peaks & Troughs in the
P/C Insurance Industry, 1926 – 2014E
ROE
Post WW II Peak:
1947: 26.2%
30%
25%
20%
Start of WW II
1941: 15.8%
1970-90: Peak premium growth was much
higher in this period while troughs were
comparable. Rapid inflation, economic
volatility, high interest rates, tort
environment all played roles
Economic Shocks,
Inflation:
1976: 22.0%
Tort Crisis
1985/86: 22.2%
1988-2000:
Period of
inter-cycle
stability
15%
10%
Post-9/11
2002:15.3%
2014E
4.0%
5%
-5%
-10%
-15%
-20%
1950-70: Extended period of
stability in growth and
profitability. Low interest rates,
low inflation, “Bureau” rate
regulation all played a role
Twin
Recessions;
Interest Rate
Hikes
1987: 3.7%
Great Depression
1932: -15.9% max drop
201020XX?
Postrecession
period of
stable
growth?
Great
Recession:
2010: -4.9%
26
28
30
32
34
36
38
40
42
44
46
48
50
52
54
56
58
60
62
64
66
68
70
72
74
76
78
80
82
84
86
88
90
92
94
96
98
00
02
04
06
08
10
12
14
0%
Note: Data through 1934 are based on stock companies only. Data include state funds beginning in 1998.
Source: A.M. Best; Insurance Information Institute.
All Lines DWP Growth: MS vs. U.S.,
2004-2013
11.1%
(Percent)
5.5%
5.4%
4.6%
4.1%
-1.1%
0.0%
-3.3%
-2.0%
-2.1%
-0.9%
0%
-5%
3.7%
3.2%
MS: 3.0%
0.5%
1.4%
3.4%
5%
Average 2004-2013
US: 2.2%
2.3%
4.1%
10%
7.5%
5.2%
15%
-10%
-15%
04
Source: SNL Financial.
05
06
07
US DWP: All Lines
08
09
10
11
MS DWP All Lines
12
13
33
Personal Lines DWP Growth:
MS vs. U.S., 2004-2013
(Percent)
20%
Average 2004-2013
US: 2.6%
15%
11
5.1%
5.2%
10
4.2%
4.3%
09
2.2%
1.9%
08
2.5%
1.2%
1.1%
0.0%
0%
-0.1%
1.8%
1.2%
2.9%
5%
2.6%
2.0%
3.2%
6.8%
5.2%
7.9%
10%
MS: 3.5%
-5%
-10%
04
05
06
07
US DWP: Personal Lines
Source: SNL Financial.
12
13
MS DWP: Personal Lines
34
Comm. Lines DWP Growth:
MS vs. U.S., 2004-2013
(Percent)
Average 2004-2013
US: 2.0%
30%
6.1%
5.8%
09
5.1%
3.6%
08
11
12
13
-2.5%
-3.8%
-7.3%
-4.0%
-10%
-3.8%
-3.7%
-0.1%
-0.3%
0%
5.1%
5.1%
16.3%
4.9%
2.5%
3.2%
5.3%
9.7%
20%
10%
MS: 2.7%
-20%
04
05
06
07
US DWP: Comm. Lines
Source: SNL Financial.
10
MS DWP: Comm.
35
Direct Premiums Written: Total P/C
Percent Change by State, 2007-2013
Top 25 States
74.6
80
North Dakota was the country’s
growth leader over the past 6
years with premiums written
expanding by 74.6%, fueled by
the state’s energy boom
60
50
16.6
15.9
15.7
14.5
14.5
14.3
12.6
11.9
11.8
11.2
10.5
10.3
9.9
9.8
9.3
9.1
9.0
8.6
TN
MN
AR
AK
IN
WI
CO
MI
KY
OH
NJ
LA
SC
VA
AL
MO
NM
22.2
TX
20
WY
22.5
24.9
IA
VT
25.2
KS
30
US: 7.9%
27.4
40
31.9
Growth Benchmarks: Total P/C
36.9
Pecent change (%)
70
NE
OK
SD
0
ND
10
Sources: SNL Financial LC.; Insurance Information Institute.
38
Direct Premiums Written: Total P/C
Percent Change by State, 2007-2013
1.0
0.4
OR
4.1
4.2
3.5
1.6
ME
Sources: SNL Financial LC.; Insurance Information Institute.
-15.3
DE
HI
WV
AZ
CA
MT
ID
NH
RI
IL
PA
WA
UT
MA
MD
NY
GA
NC
US
CT
-20
MS
-15
NV
-12.6
-6.7
Growth was negative in 7
states and DC between
2007 and 2013
-10
-5.7
-1.9
DC
-4.1
-1.7
-5
FL
0
-0.7
Pecent change (%)
5
5.3
5.6
5.9
6.2
6.9
7.0
7.3
7.6
7.8
7.9
8.2
10
8.5
Bottom 25 States
39
Going Global
Insurance Industry Growth Is
Fastest Outside the U.S. and Other
Mature Markets
48
Distribution of Nonlife Premium:
Industrialized vs. Emerging Markets, 2013
2013, $Billions
Premium Growth Facts
 Emerging market’s share of
nonlife premiums increased to
19.5% in 2013, up from 17.3%
in 2012 and 14.3% in 2009.
The share of premiums written
in the $2 trillion global nonlife
market remains much larger
(80.5%) but continues to shrink.
Industrialized
Economies
$1, 653.0
 The financial crisis and sluggish
recovery in the major insurance
markets will accelerate the
expansion of the emerging
market sector
80.5%
19.5%
Emerging
Markets
$399.8
Developing markets now
account for about 40% of
global GDP but just under
20% of nonlife premiums
Sources: Swiss Re sigma No.4/2013; Insurance Information Institute research.
50
GDP Growth: Advanced & Emerging
Economies vs. World, 1970-2015F
GDP Growth (%)
10.0
8.0
World output is forecast to grow by
3.3% in 2014 and 3.8% in 2015. The
world economy shrank by 0.6% in
2009 amid the global financial crisis
Emerging economy
growth rates are
expected to ease to 4.4%
in 2014 and 5.0% in 2015
6.0
4.0
2.0
(2.0)
(4.0)
Advanced economies are expected
to grow at a modest pace of 1.8% in
2014 and to 2.3% in 2015.
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14F
15F
0.0
Advanced economies
Emerging and developing economies
Source: International Monetary Fund, World Economic Outlook , October 2014; Insurance Information Institute.
World
Non-Life Insurance: Global Real (Inflation
Adjusted) Premium Growth, 2013
Real growth in nonlife insurance
premiums was faster
in China and most of
SE Asia than the US
Market
Life
Non-Life
Total
Advanced
-0.2
1.1
0.3
Emerging
6.4
8.3
7.4
World
0.7
2.3
1.4
Source: Swiss Re, sigma, No. 3/2014.
52
COMPETITION & DISTRIBUTION
Insurance Is a Fiercely Competitive
Business and Seems Likely Only
to Intensify
Distribution Trends Continue to
Evolve Rapidly
54
Advertising Expenditures by P/C
Insurance Industry, 1999-2013
$ Billions
$6.5
$6.0
$5.5
$5.0
$4.5
$4.0
$3.5
$3.0
$2.5
$2.0
$1.5
P/C ad spend hit an all time
record high of $6.175 billion
in 2013, up 1.5% over 2012.
The pace of growth has
slowed from 15.8% in 2011
and 23.8% in 2010
$6.088 $6.175
$5.883
P/C ad spending has more
than tripled since 2002
(up 256% from 2002-2013)
$5.079
$4.354
$4.102
$4.103
$3.426
$2.975
$1.882$2.111
$1.736 $1.737 $1.803 $1.708
99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
Source: Insurance Information Institute from consolidated P/C Annual Statement data, Insurance Expense Exhibit (Part I).
Personal Lines Distribution Channels,
Direct vs. Independent Agents
80%
70%
60%
50%
40%
30%
20%
10%
Independent agents have lost significant personal
lines market share since the early 1970s.
Although the trend has slowed, it may be
accelerating again.
0%
72 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
Direct
Independent Agents
Source: Insurance Information Institute; based on data from Conning and A.M. Best.
58
Commercial P/C Distribution Channels,
Direct vs. Independent Agents
90%
80%
70%
60%
50%
40%
Independent agents have seen only modest
erosion in commercial lines market share
in recent decades
30%
20%
10%
0%
72 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
Direct
Independent Agents
Source: Insurance Information Institute; based on data from Conning and A.M. Best.
59
Growth in Select Major Pvt. Passenger
Auto Direct Writers’ Market Share*
(% of Total PPA Market)
Direct Writers’ Market Share Has More Than Doubled Since 2000.
*Includes GEICO, Progressive Direct, Esurance and 21st Century.
Sources: SNL Financial; Insurance Information Institute.
60
Growth Rates: Major PPA Direct Writers
vs. All Private Passenger Auto Writers
(% Growth Vs. Prior Year)
Growth Has Picked Up
With the Economic
Recovery.
Direct Writers Have Grown Faster Than The Private Passenger Market
for Twelve Consecutive Years.
*Includes GEICO, Progressive Direct, Esurance and 21st Century.
Sources: SNL Financial; Insurance Information Institute.
62
: Should Insurers Be Concerned?
Google Compare
launched in California
on March 5 and sent
ripples through PPA
market
63
INDUSTRY DISRUPTORS
Technology, Society and
the Economy Are All
Changing at a Rapid Pace
Thoughts on the Future
64
Autonomous/Driverless
Vehicles
Rapid Technological Innovations in
Motor Vehicle Engineering Are
Likely to Transform Auto Insurance
and Product Liability Markets
70
Likely Impacts of Successful, Incremental
Autonomous Vehicle Technologies
 Proven Collision Avoidance Technologies Will Likely Become
Standard as Major Manufacturers, Google Set 2020-2025 Timeframes
for Fully Autonomous
 Auto Accident Frequency Will Fall, Possibly Substantially as Share
of Cars with New Technology Grows (~20-yrs.)
 Collision, BI, PIP claims should fall
 Less litigation (due to fewer claims and “black box” technologies)
 Historical Analogies to Aviation and Marine Insurance
 Both saw technology radically reduce claim frequency
 Potential “Leapfrog” Technology Over Usage-Based Insurance (UBI)
Technologies Currently Available
 Insurance Price Will Be a Major Factor in Adoption Rate
 90% would consider an autonomous car if premium is 80% lower*
*CarInsurance.com survey http://www.carinsurance.com/Articles/autonomous-cars-ready.aspx, Nov. 2013.
71
Impact of Forward Collision Warning
With and Without Auto Brake
Property
Damage
Liability Claim
Frequency by
Manufacturer
Collision
Claim
Frequency by
Manufacturer
Forward collision warning
systems have a material
impact on PD liability claim
frequency, especially when
paired with auto braking
Collision
frequency
falls as well
Source: Highway Loss Data Institute and Insurance Institute for Highway Safety presentation by Matthew Moore, Measuring Crash Avoidance System
Effectiveness with Insurance Data,” January 30, 2013; Insurance Information Institute.
72
Enhanced Vehicle and Road Safety Have
Made Driving Much Safer
Motor Vehicle Crash Deaths and Crash Death Rate, 1950-2012
Crash deaths are
down 40% since the
early 1970s
Fatal crash rates have
fallen by 85% over the
past 60 years. They
could fall 80% form
current levels over the
next 20-30 years
Source: National Highway Transportation Safety Administration as cited in Insurance Institute for Highway Safety presentation by Adrian Lund, Ph.D.,
Drivers and Driver Assistance Systems: How Well Do They Match?’, June 18, 2013; Insurance Information Institute.
73
Additional Disruptors
 “Peak Auto”
 Peak vehicle ownership per person/household likely
already reached
 Less interest in auto ownership among youth
 Preference of youth to live in urban areas, use public
transit
 The “Sharing Economy”: Vehicles & Homes On Demand
 Vehicles on Demand: Fewer vehicles likely need in the
future as the technologies of driverless vehicles and ride
sharing (e.g., Uber, Lyft)
 Dwellings on Demand: Airbnb
74
Additional Disruptors (continued)
 Disintermediation
 For commodity products, the power resides with whoever
has contact with the customer
 Fear that tech firms such as Google or Apple or a major
retailer such as Walmart or Amazon could disintermediate
agency forces (or insurers themselves if regulatory
environment were to permit)
 Big Data
 Ushering a new era of advanced/predictive analytics which
will presumably improve underwriting a pricing
 Could drive down pricing but also open up new risks to
underwrite
75
Additional Disruptors (continued)
 The Digital Economy
 Increasing share of GDP is intangible
 Insuring of “bits and bytes” and associated liability risks is
in its infancy compared to “brinks and mortar” products
 Reduced Relevancy of Insurance
 Many consumers, given the option, will forego the
purchase of insurance (p/c and life/retirement)
 Mispreception of risk, cost, product complexity, moral
hazard due to government subsidies, etc., are all factors
 Consumer perceptions need to adjusted
76
Net Written Premium/GDP
Peaked with
1986 Hard
Market
(NWP/Nominal GDP)
Short-Term, Underwriting Cycle
Drives NWP/GDP, but structural
changes in the economy reduce
penetration rate over the long run
5%
4%
Last Hard
Market
4%
3%
3%
1999-00 Soft
Market
2%
Financial
Crisis
2%
1%
NWP/GDP
10 Year Moving Average
1%
2010
Sources: Insurance Information Institute calculation using data from A.M. Best, Bureau of Economic Analysis.
2005
2000
1995
1990
1985
1980
1975
1970
1965
1960
1955
1950
0%
77
UNDERWRITING
PERFORMANCE
Underwriting Performance is More
Important than Ever in a Low
Interest Rate Environment
78
P/C Insurance Industry
Combined Ratio, 2001–2014:Q3*
As Recently as 2001,
Insurers Paid Out
Nearly $1.16 for Every
$1 in Earned
Premiums
Heavy Use of
Reinsurance
Lowered Net
Losses
120
Relatively
Low CAT
Losses,
Reserve
Releases
Relatively
Low CAT
Losses,
Reserve
Releases
Avg. CAT
Losses,
More
Reserve
Releases
115.8
110
Best
Combined
Ratio Since
1949 (87.6)
107.5
101.0
100.8
100.1
Cyclical
Deterioration
99.3
98.4
100
Higher
CAT
Losses,
Shrinking
Reserve
Releases,
Toll of Soft
Market
Sandy
Impacts
106.3
102.4
100.8
Lower
CAT
Losses
96.7
95.7
97.9
92.6
90
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
* Excludes Mortgage & Financial Guaranty insurers 2008--2014. Including M&FG, 2008=105.1, 2009=100.7, 2010=102.4, 2011=108.1; 2012:=103.2;
2013: = 96.1; 2014:9M = 97.7.
Sources: A.M. Best, ISO.
79
A 100 Combined Ratio Isn’t What It
Once Was: Investment Impact on ROEs
Combined Ratio / ROE
15.9%
110
A combined ratio of about 100 generates an
ROE of ~7.0% in 2012/13, ~7.5% ROE in 2009/10,
10% in 2005 and 16% in 1979
106.5
14.3%
12.7%
105
100.6 100.1 100.8
100
10.9%
101.2
99.5
15%
102.4
101.0
97.5
96.7
95.7
95
8.8%
7.4% 7.9%
9.6% 92.7
6.2%
12%
9%
9.8%
Lower CATs
helped ROEs
in 2013
4.3%
85
97.9
7.4%
4.7%
90
18%
6%
3%
0%
80
1978
1979
2003
2005
2006
2007
2008
Combined Ratio
2009
2010
2011
2012
2013 2014:Q3
ROE*
Combined Ratios Must Be Lower in Today’s Depressed
Investment Environment to Generate Risk Appropriate ROEs
* 2008 -2014 figures are return on average surplus and exclude mortgage and financial guaranty insurers. 2014:9M combined ratio
including M&FG insurers is 97.7; 2013 = 96.1; 2012 =103.2, 2011 = 108.1, ROAS = 3.5%.
Source: Insurance Information Institute from A.M. Best and ISO Verisk Analytics data.
100.8
101.0
102.2
101.6
102.1
102.0
101.0
101.3
100.2
98.3
95.5
95.1
98.4
101.1
101.0
101.3
104.2
94.3
95
99.5
100
101.3
105
101.7
110
103.5
109.5
115
107.9
Private Passenger Auto Combined
Ratio: 1993–2016F
90
85
80
93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14E15F16F
Private Passenger Auto Accounts for 37% of Industry Premiums and
Remains the Profit Juggernaut of the P/C Insurance Industry
Sources: A.M. Best (1990-2013); Insurance Information Institute (2014F – 2015F).
81
Homeowners Insurance Combined
Ratio: 1990–2015F
Hurricane
Sandy
99.5
122.3
106.9
104.1
95.6
89.0
90
100.3
94.4
1
105.8
116.6
109.3
121.7
111.4
108.2
109.4
112.7
118.4
Hurricane
Ike
98.2
100
101.0
110
113.6
120
117.7
130
113.0
140
121.7
150
97.5
160
Record
tornado
activity
94.0
158.4
170
Hurricane
Andrew
80
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14E 15F
Homeowners Performance in 2011/12 Impacted by Large Cat
Losses. Extreme Regional Variation Can Be Expected Due to
Local Catastrophe Loss Activity
Sources: A.M. Best (1990-2014F);Conning (2015F); Insurance Information Institute.
82
Commercial Lines Combined Ratio,
1990-2015F*
122.3
91.1
95
98.9
99.9
93.6
100
98.3
98.9
102.4
103.4
107.9
105.4
104.2
102.0
105
102.5
110.2
111.1
112.3
109.7
104.1
107.6
110.2
112.5
118.8
109.5
110
110.2
115
109.4
Commercial Lines Combined Ratio
125
120
Commercial lines
underwriting
performance is expected
to improve as
improvement in pricing
environment persists
*2007-2012 figures exclude mortgage and financial guaranty segments.
Source: A.M. Best (1990-2014F); Conning (2015F) Insurance Information Institute.
15F
14F
13F
12
11
10
09
08
07
06
05
04
03
02
01
00
99
98
97
96
95
94
93
92
91
90
90
83
Workers Compensation Combined
Ratio: 1994–2014E
96.0
101.0
108.0
115.0
115.0
110.6
104.5
103.5
102.7
105.1
112.6
108.6
101.0
98.5
100
100.0
105
97.0
110
102.0
115
107.0
120
121.7
115.3
125
118.2
130
WC results have
improved markedly
since 2011
95
90
85
80
94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14F
Workers Comp Results Began to Improve in 2012.
Underwriting Results Deteriorated Markedly from 20072010/11 and Were the Worst They Had Been in a Decade.
Sources: A.M. Best (1994-2009); NCCI (2010-2014F) and are for private carriers only; Insurance Information Institute.
87
U.S. Health Care Expenditures,
1965–2022F
$ Billions
$5,000
$4,000
$3,000
$2,000
$1,000
$0
65 $42.0
66 $46.3
67 $51.8
68 $58.8
69 $66.2
70 $74.9
71 $83.2
72 $93.1
73 $103.4
74 $117.2
75 $133.6
76 $153.0
77 $174.0
$195.5
78
$221.7
79
$255.8
80
$296.7
81
$334.7
82
$369.0
83
$406.5
84
$444.6
85
$476.9
86
$519.1
87
$581.7
88
$647.5
89
$724.3
90
$791.5
91
$857.9
92
$921.5
93
$972.7
94
$1,027.4
95
$1,081.8
96
$1,142.6
97
$1,208.9
98
$1,286.5
99
$1,377.2
00
$1,493.3
01
$1,638.0
02
$1,775.4
03
$1,901.6
04
$2,030.5
05
$2,163.3
06
$2,298.3
07
$2,406.6
08
$2,501.2
09
$2,600.0
10
$2,700.7
11
$2,806.6
12
$2,914.7
13
$3,093.2
14
$3,273.4
15
$3,458.3
16
$3,660.4
17
$3,889.1
18
$4,142.4
19
$4,416.2
20
$4,702.0
21
$5,008.8
22
$6,000
From 1965 through 2013, US
health care expenditures had
increased by 69 fold.
Population growth over the
same period increased by a
factor of just 1.6. By 2022,
health spending will have
increased 119 fold.
U.S. health care expenditures have been on a relentless climb for
most of the past half century, far outstripping population growth,
inflation of GDP growth
Sources: Centers for Medicare & Medicaid Services, Office of the Actuary at http://www.cms.gov/Research-Statistics-Data-and-Systems/StatisticsTrends-and-Reports/NationalHealthExpendData/NationalHealthAccountsProjected.html accessed 3/14/14; Insurance Information Institute.
88
National Health Care Expenditures as a
Share of GDP, 1965 – 2022F*
% of GDP
20%
18%
16%
Health care expenditures as a share
of GDP rose from 5.8% in 1965 to
18.0% in 2013 and are expected to
reach 19.9% of GDP by 2022
2022
19.9%
2010:
17.9%
14%
12%
10%
1990:
12.5%
8%
6%
2%
0%
1965
5.8%
Since 2009, heath
expenditures as a %
of GDP have
flattened out at
about 18%--the
question is why and
will it last?
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
22
4%
1980:
9.2%
2000:
13.8%
Sources: Centers for Medicare & Medicaid Services, Office of the Actuary at http://www.cms.gov/Research-Statistics-Data-and-Systems/StatisticsTrends-and-Reports/NationalHealthExpendData/NationalHealthAccountsProjected.html accessed 3/14/14; Insurance Information Institute.
INVESTMENTS:
THE NEW REALITY
Investment Performance is a Key
Driver of Profitability
Depressed Yields Will Necessarily
Influence Underwriting & Pricing
92
Property/Casualty Insurance Industry
Investment Income: 2000–20141
Investment earnings
are still below their
2007 pre-crisis peak
($ Billions)
$60
$54.6
$52.3
$50
$40
$51.2
$49.5
$49.2
$47.1 $47.6
$38.9
$38.7
$48.0 $47.4
$45.7
$39.6
$37.1 $36.7
$30
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14*
Due to persistently low interest rates,
investment income fell in 2012, 2013 and 2014.
1
Investment gains consist primarily of interest and stock dividends.
Sources: ISO; Insurance Information Institute.
*2014 figure is estimated based on annualized data through Q3.
U.S. Treasury Security Yields:
A Long Downward Trend, 1990–2015*
9%
Yields on 10-Year U.S. Treasury
Notes have been essentially
below 5% for a full decade.
8%
7%
6%
U.S. Treasury
yields plunged to
historic lows in
2013. Longerterm yields
rebounded then
sank fell again.
5%
4%
3%
2%
1%
0%
Recession
2-Yr Yield
10-Yr Yield
'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15
Since roughly 80% of P/C bond/cash investments are in 10-year or shorter durations,
most P/C insurer portfolios will have low-yielding bonds for years to come.
*Monthly, constant maturity, nominal rates, through Feb. 2015.
Sources: Federal Reserve Bank at http://www.federalreserve.gov/releases/h15/data.htm. National Bureau of Economic Research
(recession dates); Insurance Information Institute.
95
Book Yield on Property/Casualty
Insurance Invested Assets, 2007–2016F
(Percent)
4.6
Book yield in 2014 is
down 114 BP from
pre-crisis levels
4.42
4.4
4.19
4.2
3.95
4.0
3.71
3.8
3.74
3.52
3.6
3.38
3.4
3.28
3.20
3.2
3.13
3.0
07
08
09
10
11
12
13
14E
15F
16F
The yield on invested assets continues to decline as returns on
maturing bonds generally still exceed new money yields. The end
of the Fed’s QE program in Oct. 2014 should allow some increase
in longer maturities while short term interest rate increases are
unlikely until mid-to-late 2015
Sources: Conning.
PRICING TRENDS
Pricing Needs to Keep Up with
Underlying Frequency and
Severity Trends and Offset
Declining Investment Income
104
Monthly Change in Auto Insurance
Prices, 1991–2015*
10%
8%
Cyclical peaks in PP Auto
tend to occur roughly
every 10 years (early
1990s, early 2000s and
likely the early 2010s)
Pricing peak
occurred in late
2010 at 5.3%, falling
to 2.8% by Mar. 2012
6%
4%
2%
0%
“Hard” markets
tend to occur
during
recessionary
periods
The Jan. 2015
reading of 5.0% is
up from 3.4%
a year earlier
-2%
'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '14
*Percentage change from same month in prior year; through January 2015; seasonally adjusted
Note: Recessions indicated by gray shaded columns.
Sources: US Bureau of Labor Statistics; National Bureau of Economic Research (recession dates); Insurance Information Institutes.
105
Average Expenditures on Auto Insurance
The average expenditure on auto insurance
remained below 2004 until 2013
$950
$900
$877
$850
$830
$842
$856
$831
$835
$816
$795 $789 $787 $792 $798
$786
$800
$750
$815
$726
$691
$700
$705 $703
$685 $690
$668
$651
$650
13
E
14
E
15
F
12
11
10
09
08
07
06
05
04
03
02
01
00
99
98
97
96
95
94
$600
Countrywide Auto Insurance Expenditures decreased by 6.5% from
2004 through 2009, rising gradually since the with annual increases
in the 2.0% to 2.5% range
* Insurance Information Institute Estimates/Forecasts
Source: NAIC, Insurance Information Institute estimate for 2013-2015 based on CPI and other data.
106
Average Commercial Rate Change,
All Lines, (1Q:2004–4Q:2014)
-6%
-11%
-16%
0.1%
-0.7%
-3.2%
-5.9%
-7.0%
-9.4%
-9.7%
-8.2%
-4.6%
-2.7%
-3.0%
-5.3%
-9.6%
-11.3%
-11.8%
-13.3%
-12.0%
-13.5%
-12.9%
-11.0%
-6.4%
-5.1%
-4.9%
-5.8%
-5.6%
-5.3%
-6.4%
-5.2%
-5.4%
-2.9%
-0.1%
-1%
-0.1%
4%
Q2 2011 marked the
last of 30th
consecutive quarter
of price declines
-0.5%
9%
0.9%
2.7%
4.4%
4.3%
3.9%
5.0%
5.2%
4.3%
3.4%
2.1%
1.5%
(Percent)
Pricing as of Q4:2014 had
turned (slightly) negative for
only the 2nd time in 3 years
1Q04
2Q04
3Q04
4Q04
1Q05
2Q05
3Q05
4Q05
1Q06
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
KRW Effect
Note: CIAB data cited here are based on a survey. Rate changes earned by individual insurers can and do vary, potentially substantially.
Source: Council of Insurance Agents & Brokers; Insurance Information Institute
107
CATASTROPHE LOSSES
2014 Experiencing Below Average CAT
Activity Following a Welcome Respite in
2013 from Very High CAT Losses in 2011/12
112
U.S. Insured Catastrophe Losses
$74.5
($ Billions, $ 2013)
$80
$70
2012 was the 3rd most
expensive year ever for
insured CAT losses
$15.3
$12.9
$35.5
$34.1
$14.6
$11.6
$29.6
$7.6
$10.7
$16.5
$7.7
$34.2
$35.2
$6.2
$11.7
$14.5
$11.1
$12.8
$3.8
$10
$8.1
$20
$4.9
$30
$14.2
$40
$8.9
$50
$26.8
$38.3
$60
$0
89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
2013 Was a Welcome Respite from 2012, the 3rd
Costliest Year for Insured Disaster Losses in US
History. Longer-term Trend is for more—not
fewer—Costly Events
$15.3 billion in
insured CAT
losses estimated
for 2014
*Through 12/31/14.
Note: 2001 figure includes $20.3B for 9/11 losses reported through 12/31/01 ($25.9B 2011 dollars). Includes only business and personal property
claims, business interruption and auto claims. Non-prop/BI losses = $12.2B ($15.6B in 2011 dollars.)
Sources: Property Claims Service/ISO; Insurance Information Institute.
113
113
Inflation Adjusted U.S. Catastrophe
Losses by Cause of Loss, 1994–20131
Wind/Hail/Flood (3), $14.6
Fires (4), $5.5
Other (5), $0.2
1.4%
Geological Events, $18.4
4.8% 3.8%0.1%
Terrorism, $24.8
6.4%
Winter Storms, $24.7
6.4%
Tornado share of
CAT losses is
rising
Events Involving
Tornadoes (2), $139.3
Insured cat losses
from 1993-2012
totaled $386.7B, an
average of $19.3B
per year or $1.6B
per month
41.1%
Hurricanes & Tropical Storms,
$159.1
36.0%
Wind losses are by
far cause the most
catastrophe losses,
even if hurricanes/TS
are excluded.
1. Catastrophes are defined as events causing direct insured losses to property of $25 million or more in 2013 dollars.
2. Excludes snow.
3. Does not include NFIP flood losses
4. Includes wildland fires
5. Includes civil disorders, water damage, utility disruptions and non-property losses such as those covered by workers compensation.
Source: ISO’s Property Claim Services Unit.
117
Top 16 Most Costly Disasters
in U.S. History
(Insured Losses, 2013 Dollars, $ Billions)
Superstorm Sandy in
2012 was the last
mega-CAT to hit the
US
$60
$50
$49.4
$40
$30
Includes
Tuscaloosa, AL,
tornado
Includes
Joplin, MO,
tornado
$24.2 $24.9 $25.9
$19.0
$20
$10
$0
$9.3 $11.2
$8.8
$7.9
$7.6
$7.2
$6.8
$4.5 $5.6 $5.7
Irene (2011) Jeanne
(2004)
Frances
(2004)
Rita
Tornadoes/Tornadoes/ Hugo
(2005) T-Storms T-Storms
(1989)
(2011)
(2011)
Ivan
(2004)
Charley
(2004)
Wilma
(2005)
$13.6
Ike
(2008)
Sandy* Northridge9/11 Attack Andrew
(2012)
(1994)
(2001)
(1992)
Katrina
(2005)
12 of the 16 Most Expensive
Events in US History Have
Occurred Over the Past Decade
Sources: PCS; Insurance Information Institute inflation adjustments to 2013 dollars using the CPI.
118
Federal Disasters Declarations by State,
1953 – 2014: Highest 25 States*
Over the past 60 years,
MIssissippi has had the 13th
highest number of Federal
Disaster Declarations
75
45
47
49
47
43
40
40
50
51
51
51
53
53
50
50
53
55
56
56
57
58
60
60
67
70
69
Disaster Declarations
80
80
90
88
100
30
20
10
0
TX CA OK NY FL LA AL KY AR MO IA
IL MS TN WV MN NE KS PA WA OH VA ND SD ME
*Through December 31, 2014. Includes Puerto Rico and the District of Columbia.
Source: FEMA: http://www.fema.gov/news/disaster_totals_annual.fema; Insurance Information Institute.
121
CYBER RISK &
CYBER INSURANCE
Cyber Risk is a Rapidly Emerging
Exposure for Businesses Large and
Small in Every Industry
Rapidly Increasing Interest from
Businesses, Media & Public Policymakers
125
Data Breaches 2005-2014, by Number of
Breaches and Records Exposed
# Data Breaches/Millions of Records Exposed
Millions
222.5
800
700
783
200
662
656
619
180
600
160
498
500
140
446127.7
419
447
87.9
400
66.9
120
85.6
321
35.7
157
100
80
300
200
220
60
16.2
19.1
22.9
40
17.3
20
100
0
2005
2006
2007
2008
2009
# Data Breaches
2010
2011
2012
2013
2014
# Records Exposed (Millions)
The Total Number of Data Breaches Rose 28% While the Number of
Records Exposed Was Relatively Flat (-2.6%)
126
* 2014 figures as of Jan. 12, 2014 from the ITRC.
Source: Identity Theft Resource Center.
Data/Privacy Breach:
Many Potential Costs Can Be Insured
Costs of
notifying
regulatory
authorities
Regulatory
fines at
home &
abroad
Costs of
notifying
affecting
individuals
Data
Breach
Event
Forensic costs
to discover
cause
Defense and
settlement
costs
Lost customers
and damaged
reputation
Cyber extortion
payments
Business
Income Loss
Source: Zurich Insurance; Insurance Information Institute
128
The Three Basic Elements of Cyber
Coverage: Prevention, Transfer, Response
Loss
Prevention
Loss
Transfer
(Insurance)
Post-Breach
Response
(Insurable)
Cyber risk management today involves
three essential components, each designed
to reduce, mitigate or avoid loss. An
increasing number of cyber risk products
offered by insurers today provide all three.
Source: Insurance Information Institute research.
129
I.I.I. Released its Second Cyber Report in
2014: Cyber Risk: The Growing Threat
 I.I.I.’s 2nd report on cyber risk
released June 2014
 Provides information on cyber
threats and insurance market
solutions
 Global cyber risk overview
 Quantification of threats by
type and industry
 Cyber security and cost of attacks
 Cyber terrorism
 Cyber liability
 Insurance market for cyber risk
 3rd Report in Q2 2015
130
CAPITAL/CAPACITY
Capital Accumulation Has
Multiple Impacts
131
$671.6
$673.9
14:Q3
$624.4
14:Q2
$586.9
$583.5
$567.8
$570.7
$550.3
$538.6
$559.1
$544.8
$530.5
$540.7
$511.5
$490.8
14:Q1
13:Q4
13:Q3
13:Q2
13:Q1
12:Q4
12:Q3
12:Q2
12:Q1
11:Q4
11:Q3
11:Q2
11:Q1
10:Q4
10:Q3
10:Q2
10:Q1
09:Q4
Surplus as of 9/30/14 stood at
a record high $673.9B
09:Q3
$437.1
$463.0
09:Q2
08:Q4
08:Q3
08:Q2
08:Q1
07:Q4
07:Q3
07:Q2
07:Q1
$400
06:Q4
$450
09:Q1
$455.6
$478.5
$505.0
$515.6
$517.9
$521.8
$496.6
$500
$487.1
$550
$512.8
$600
$559.2
$566.5
$650
$614.0
2007:Q3
Pre-Crisis Peak
$700
$607.7
Drop due to near-record
2011 CAT losses
$662.0
($ Billions)
$653.3
Policyholder Surplus,
2006:Q4–2014:Q3
The industry now has $1 of surplus for every $0.73 of NPW,
close to the strongest claims-paying status in its history.
2010:Q1 data includes $22.5B of
paid-in capital from a holding
company parent for one insurer’s
investment in a non-insurance
business .
Sources: ISO, A.M .Best.
The P/C insurance industry entered 2015
in very strong financial condition.
132
Alternative Capital
New Investors Continue to Change
the Reinsurance Landscape
First I.I.I. White Paper on Issue Will Be
Released March 2015
137
Global Reinsurance Capital (Traditional
and Alternative), 2006 - 2014
Total reinsurance capital reached a
record $570B in 2013, up 68% from
2008.
But alternative capacity has grown 210% since 2008, to $50B. It has more
than doubled in the past three years.
2014 data is as of June 30, 2014.
Source: Aon Benfield Analytics; Insurance Information Institute.
Alternative Capital as a Percentage of
Traditional Global Reinsurance Capital
Alternative Capital’s Share of Global Reinsurance Capital Has More Than
Doubled Since 2010.
2014 data is as of June 30, 2014.
Source: Aon Benfield Analytics; Insurance Information Institute.
Catastrophe Bond Issuance and
Outstanding: 1997-2014
Risk Capital Amount ($ Millions)
2014 Has Seen the Largest Cat Bond Ever - $1.5 Billion (Florida Citizens).
Bond Issuance Set a Record.
Source: Guy Carpenter.
141
Reinsurance Pricing: Change in Rate on
Line for Cat Business
Alternative
Capital, Low
Levels of
Catastrophe
Drive Rates
Down.
76%
2006: Higher Rates
After Record
Hurricanes.
(Change from Previous Year)
40%
30%
2001-02: WTC
Losses, Falling
Stock, Bond Prices
Dry Up Capital.
20%
14%
Japan, NZ Quakes,
US Tornadoes.
14%
10%
10%
7%
0%
-6%
-10%
-11%
-20%
-3%
-9%
-7%
-12%
-11%
-16%
-17%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Catastrophe Prices Fell 11 Percent on January 1 Renewals, Driven by
Emergence of New Capital, Mild Catastrophe Losses.
2014 reflects change through June 30 from prior year end. 2015 is for January 1 renewals..
Source: Guy Carpenter; Insurance Information Institute.
THE ECONOMY
Strength of the Economy Will Influence
Growth Across Most Lines
155
US Real GDP Growth*
1%
-7%
-0.3%
Q1 2014 GDP data
were hit hard by this
year’s “Polar Vortex”
and harsh winter
2.2%
2.7%
2.9%
3.0%
2.9%
2.8%
2.8%
2.8%
2.7%
4.6%
5.0%
-8.9%
2000
2001
2002
2003
2004
2005
2006
2007
08:1Q
08:2Q
08:3Q
08:4Q
09:1Q
09:2Q
09:3Q
09:4Q
10:1Q
10:2Q
10:3Q
10:4Q
11:1Q
11:2Q
11:3Q
11:4Q
12:1Q
12:2Q
12:3Q
12:4Q
13:1Q
13:2Q
13:3Q
13:4Q
14:1Q
14:2Q
14:3Q
14:4Q
15:1Q
15:2Q
15:3Q
15:4Q
16:1Q
16:2Q
16:3Q
16:4Q
-9%
-5.3%
-5%
Recession
began in
in June
2009
-3.7%
-3%
-1.8%
-1%
-2.1%
5.0%
1.4%
2.3%
2.2%
2.6%
2.4%
0.1%
2.5%
1.3%
4.1%
2.0%
1.3%
3.1%
0.4%
2.7%
1.8%
4.5%
3.5%
3%
The Q4:2008 decline was
the steepest since the
Q1:1982 drop of 6.8%
1.3%
5%
1.1%
1.8%
2.5%
3.6%
3.1%
2.7%
1.8%
7%
4.1%
Real GDP Growth (%)
Demand for Insurance Should Increase in 2015 as GDP Growth
Accelerates Modestly and Gradually Benefits the Economy Broadly
*
Estimates/Forecasts from Blue Chip Economic Indicators.
Source: US Department of Commerce, Blue Economic Indicators 2/15; Insurance Information Institute.
156
Percent Change in Real GDP by State, 2013
Sources: US Bureau of Economic Analysis; Insurance Information Institute.
160
Auto/Light Truck Sales, 1999-2020F
14.4
16
12
11
10
16.8
16.9
16.8
16.9
17.1
16.9
16.4
Sales have
returned to precrisis levels
12.7
11.6
13
New auto/light truck sales fell to
the lowest level since the late
1960s. Forecast for 2014-15 is
still below 1999-2007 average of
17 million units, but a robust
recovery is well underway.
10.4
14
13.2
15
15.5
16.5
16.9
16.9
17.1
17.5
16.6
17
17.8
18
17.4
19
16.1
Job growth and improved
credit market conditions
will boost auto sales in
2014 and beyond
(Millions of Units)
Truck purchases by
contractors are
especially strong
9
99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15F 16F 17F 18F 19F 20F
Yearly car/light truck sales will likely continue at current levels, in part
replacing cars that were held onto in 2008-12. New vehicles will generate
more physical damage insurance coverage but will be more expensive to
repair. PP Auto premium might grow by 5% - 6%.
Source: U.S. Department of Commerce; Blue Chip Economic Indicators (2/15 and 10/14); Insurance Information Institute.
162
New Private Housing Starts, 1990-2020F
2.1
1.9
1.7
1.5
1.3
1.1
0.9
0.7
0.5
New home starts
plunged 72% from
2005-2009; A net
annual decline of 1.49
million units, lowest
since records began
in 1959
0.55
0.59
0.61
0.78
0.92
1.01
1.16
1.30
1.42
1.46
1.48
1.50
1.19
1.01
1.20
1.29
1.46
1.35
1.48
1.47
1.62
1.64
1.57
1.60
1.71
1.85
1.96
2.07
1.80
1.36
0.91
Job growth, low inventories of
existing homes, low mortgage rates
and demographics should continue
to stimulate new home construction
for several more years
(Millions of Units)
0.3
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15F16F17F18F19F20F
Insurers Are Continue to See Meaningful Exposure Growth in the Wake of the
“Great Recession” Associated with Home Construction: Construction Risk
Exposure, Surety, Commercial Auto; Potent Driver of Workers Comp Exposure
Source: U.S. Department of Commerce; Blue Chip Economic Indicators (2/15 and 10/14); Insurance Information Institute.
163
12 Industries for the Next 10 Years:
Insurance Solutions Needed
Health Care
Health Sciences
Energy (Traditional)
Alternative Energy
Petrochemical
Agriculture
Natural Resources
Technology (incl. Biotechnology)
Many
industries are
poised for
growth,
though
insurers’
ability to
capitalize on
these
industries
varies widely
Light Manufacturing
Insourced Manufacturing
Export-Oriented Industries
Shipping (Rail, Marine, Trucking, Pipelines)
171
Value of New Private Construction:
Residential & Nonresidential, 2003-2014*
Billions of Dollars
New Construction peaks
at $911.8. in 2006
Trough in 2010
at $500.6B,
after plunging
55.1% ($411.2B)
$1,000
$900
$800
$15.0
2014: Value of new
pvt. construction
hits $698.6B as of
Nov. 2014, up 40%
from the 2010
trough but still 23%
below 2006 peak
$613.7
$700
$600
$349.6
$500
$298.1
$400
$300
$261.8
Non Residential
Residential
$200
$100
$349.0
$238.8
$0
03
04
05
06
07
08
09
10
11
12
13
14*
Private Construction Activity Is Moving in a Positive Direction though
Remains Well Below Pre-Crisis Peak; Residential Dominates
*2014 figure is a seasonally adjusted annual rate as of December.
Sources: US Department of Commerce http://www.census.gov/construction/c30/c30index.html ; Insurance Information Institute.
173
Value of New Federal, State and Local
Government Construction: 2003-2014*
($ Billions)
$350
Austerity Reigns
Construction
across all levels
of government
peaked at $314.9B
in 2009
Govt. construction MAY be
turning a corner; still down
$33.8B or 10.7% since 2009 peak
$308.7
$314.9
$289.1
$300
$304.0
$286.4
$279.0
$271.4
$281.1
$255.4
$250
$216.1
$220.2
2003
2004
$234.2
$200
$150
$100
$50
$0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014*
Government Construction Spending Peaked in 2009, Helped by Stimulus
Spending, but Contracted As State/Local Governments Grappled with
Deficits and Federal Sequestration
*2014 figure is a seasonally adjusted annual rate as of December; http://www.census.gov/construction/c30/historical_data.html
Sources: US Department of Commerce; Insurance Information Institute.
178
6,100
6,000
5,900
5,800
5,700
5,600
5,500
5,400
5,581
5,522
5,542
5,554
5,527
5,512
5,497
5,519
5,499
5,501
5,497
5,468
5,435
5,478
5,485
5,497
5,524
5,530
5,547
5,546
5,583
5,576
5,577
5,612
5,629
5,644
5,640
5,636
5,615
5,622
5,627
5,630
5,633
5,649
5,673
5,711
5,735
5,783
5,799
5,792
5,791
5,801
5,804
5,805
5,822
5,830
5,849
5,876
5,927
5,927
5,964
6,000
6,009
6,017
6,047
6,064
6,082
6,098
6,118
6,166
6,200
Jan-10
Feb-10
Mar-10
Apr-10
May-10
Jun-10
Jul-10
Aug-10
Sep-10
Oct-10
Nov-10
Dec-10
Jan-11
Feb-11
Mar-11
Apr-11
May-11
Jun-11
Jul-11
Aug-11
Sep-11
Oct-11
Nov-11
Dec-11
Jan-12
2/30/2
Mar-12
Apr-12
May-12
Jun-12
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-12
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Construction Employment,
Jan. 2010—December 2014*
(Thousands)
6,300
Construction employment
is +731,000 above
Jan. 2011 (+13.4%) trough
Construction and manufacturing employment constitute 1/3 of all WC payroll exposure.
*Seasonally adjusted.
Sources: US Bureau of Labor Statistics at http://data.bls.gov; Insurance Information Institute.
180
Dollar Value* of Manufacturers’
Shipments Monthly, Jan. 1992—November 2014
$ Millions
$500,000
The value of Manufacturing
Shipments in Nov. 2014 was
$495.7B—down slightly since the
July 2014 record high of $508.1B
$400,000
$300,000
Ja
n9
Ja 2
n9
Ja 3
n9
Ja 4
n9
Ja 5
n9
Ja 6
n9
Ja 7
n9
Ja 8
n9
Ja 9
n0
Ja 0
n
0
Ja 1
n
0
Ja 2
n
0
Ja 3
n
0
Ja 4
n
0
Ja 5
n
0
Ja 6
n
0
Ja 7
n
0
Ja 8
n
0
Ja 9
n
1
Ja 0
n
1
12 1
-J
a
13 n
-J
a
14 n
-J
an
$200,000
Monthly shipments in Nov. 2014 exceeded the pre-crisis (July 2008) peak but has
declined in recent months. Manufacturing is energy-intensive and growth leads to
gains in many commercial exposures: WC, Commercial Auto, Marine, Property, and
various Liability Coverages.
* Seasonally adjusted; Data published Jan. 6, 2015.
Source: U.S. Census Bureau, Full Report on Manufacturers’ Shipments, Inventories, and Orders, http://www.census.gov/manufacturing/m3/ 183
ENERGY SECTOR: OIL & GAS
INDUSTRY FUTURE IS BRIGHT
BUT VOLATILE
US Is Becoming an Energy
Powerhouse but Fall in Prices
Will Have Negative Impact
190
U.S. Crude Oil Production, 2005-2016P
Millions of Barrels per Day
12
Crude oil production in the
U.S. is expected to increase
by 90.6% from 2008 through
2016—and could overtake
Saudi Arabia as the world’s
largest oil producer
10
8
9.31
9.53
8.67
7.44
6.49
6
5.19
5.09
5.08
5.00
5.35
5.47
5.65
4
2
F
20
16
F
20
15
20
14
20
13
20
12
20
11
20
10
20
09
20
08
20
07
20
06
20
05
0
Source: Energy Information Administration, Short-Term Energy Outlook (January 15, 2015) , Insurance Information Institute.
U.S. Natural Gas Production, 2000-2013
Trillions of Cubic Ft. per Year
28
25.3 25.6
26
24.0
24
22
20
20.2 20.6 19.9 20.0
19.5
21.1
18.9
19.4
21.6
22.4
20.2
18
The U.S. is already the world’s
largest natural gas producer—
recently overtaking Russia. This
is a potent driver of commercial
insurance exposures
16
14
12
10
00
01
02
03
04
05
06
07
08
09
10
11
Source: Energy Information Administration, Short-Term Energy Outlook (April 8, 2014) , Insurance Information Institute.
12
13
150
*Seasonally adjusted
Sources: US Bureau of Labor Statistics at http://data.bls.gov; Insurance Information Institute.
Dec-14
Oct-14
Aug-14
Jun-14
Apr-14
Feb-14
Dec-13
Oct-13
Aug-13
Jun-13
Apr-13
Feb-13
Oil and gas extraction
employment is up 37.7% since
Jan. 2010 as the energy sector
booms. (Previous boom in
1979-81, employment peak at
267,000 in March 1982.)
Dec-12
Oct-12
Aug-12
Jun-12
Apr-12
Feb-12
Dec-11
Oct-11
Aug-11
Jun-11
Apr-11
160
Feb-11
170
Dec-10
180
Oct-10
(000)
Aug-10
190
Jun-10
200
Apr-10
210
156.6
156.9
157.5
158.7
158.2
158.3
159.7
160.1
161.2
161.4
160.8
162.8
164.4
166.8
169.2
170.1
171.1
172.6
173.9
176.4
177.9
178.6
180.4
181.4
182.4
184.9
185.2
186.2
187.8
188.6
189.0
189.2
189.0
190.6
192.4
193.2
194.8
194.2
194.9
195.7
196.0
197.5
198.7
199.7
200.6
203.1
204.3
205.3
207.8
207.5
207.9
210.1
211.3
212.2
212.2
213.1
215.1
215.7
216.1
220
Feb-10
Employment in Oil & Gas Extraction,
Jan. 2010—Dec. 2014*
Highest employment in this
sector since July 1986.
193
Labor Market Trends
Massive Job Losses Sapped the
Economy and Commercial/Personal
Lines Exposure, But Trend Has
Greatly Improved
194
Unemployment and Underemployment
Rates: Still Too High, But Falling
January 2000 through February 2015,
Seasonally Adjusted (%)
18
"Headline" Unemployment Rate U-3
16
Unemployment + Underemployment Rate
U-6
14
12
U-6 went from
8.0% in March
2007 to 17.5% in
October 2009;
Stood at 11.0%
in Feb. 2015.
8% to 10% is
“normal.”
10
8
“Headline”
unemployment
was 5.5% in Feb.
2015. 4.5% to
5.5% is “normal.”
6
4
2
Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
Stubbornly high unemployment and underemployment constrain overall
economic growth, but the job market is now clearly improving.
Source: US Bureau of Labor Statistics; Insurance Information Institute.
195
US Unemployment Rate Forecast
Rising unemployment
eroded payrolls
and WC’s
exposure base.
11%
Unemployment peaked
at 10% in late 2009.
10%
6%
5%
4.5%
4.5%
4.6%
4.8%
4.9%
5.4%
6.1%
6.9%
7%
8.1%
9%
8%
9.3%
9.6%
10.0%
9.7%
9.6%
9.6%
9.6%
8.9%
9.1%
9.1%
8.7%
8.3%
8.2%
8.0%
7.8%
7.7%
7.6%
7.3%
7.0%
6.6%
6.2%
6.1%
5.7%
5.6%
5.4%
5.3%
5.2%
5.2%
5.1%
5.0%
5.0%
2007:Q1 to 2016:Q4F*
Jobless figures
have been revised
downwards for
2015/16
Unemployment forecasts
have been revised modestly
downwards. Optimistic
scenarios put the
unemployment as low as
5.0% by Q4 of 2015.
07:Q1
07:Q2
07:Q3
07:Q4
08:Q1
08:Q2
08:Q3
08:Q4
09:Q1
09:Q2
09:Q3
09:Q4
10:Q1
10:Q2
10:Q3
10:Q4
11:Q1
11:Q2
11:Q3
11:Q4
12:Q1
12:Q2
12:Q3
12:Q4
13:Q1
13:Q2
13:Q3
13:Q4
14:Q1
14:Q2
14:Q3
14:Q4
15:Q1
15:Q2
15:Q3
15:Q4
16:Q1
16:Q2
16:Q3
16:Q4
4%
*
= actual;
= forecasts
Sources: US Bureau of Labor Statistics; Blue Chip Economic Indicators (2/15 edition); Insurance Information Institute.
196
(600)
(800)
(1,000)
Monthly losses
in Dec. 08–Mar.
09 were the
largest in the
post-WW II
period
-426
-422
-486
(400)
-776
-693
-821
-698
-810
-801
(200)
-294
-272
-232
-141
-271
-15
-232
-38
-115
-106
-221
-215
-206
-261
-258
-71
January 2007 through Feb. 2015 (Thousands, Seasonally Adjusted) 3,042,000 jobs
were created
600
in 2014
400
113
192
94
110
120
117
107
199
149
94
72
223
231
320
166
186
219
125
268
177
191
222
364
228
246
102
131
75
172
136
159
255
211
215
219
263
164
188
222
201
170
180
153
247
272
86
183
175
223
313
238
272
243
209
235
218
414
319
237
288
20
3
32
64
81
55
3
0
231
52
170
52
126
57
200
Jan-07
Feb-07
Mar-07
Apr-07
May-07
Jun-07
Jul-07
Aug-07
Sep-07
Oct-07
Nov-07
Dec-07
Jan-08
Feb-08
Mar-08
Apr-08
May-08
Jun-08
Jul-08
Aug-08
Sep-08
Oct-08
Nov-08
Dec-08
Jan-09
Feb-09
Mar-09
Apr-09
May-09
Jun-09
Jul-09
Aug-09
Sep-09
Oct-09
Nov-09
Dec-09
Jan-10
Feb-10
Mar-10
Apr-10
May-10
Jun-10
Jul-10
Aug-10
Sep-10
Oct-10
Nov-10
Dec-10
Jan-11
Feb-11
Mar-11
Apr-11
May-11
Jun-11
Jul-11
Aug-11
Sep-11
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12
Mar-12
Apr-12
May-12
Jun-12
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Monthly Change in Private Employment
Jobs Created
2014: 3.042 Mill
2013: 2.368 Mill
2012: 2.294 Mill
2011: 2.400 Mill
2010: 1.277 Mill
Source: US Bureau of Labor Statistics: http://www.bls.gov/ces/home.htm; Insurance Information Institute
288,000 private
sector jobs were
created in Feb. In
March 2014, the last
of the private jobs
lost in the Great
Recession were
recovered
Private Employers Added 11.38 million Jobs Since Jan. 2010 After
Having Shed 5.01 Million Jobs in 2009 and 3.76 Million in 2008 (State
and Local Governments Have Shed Hundreds of Thousands of Jobs)
197
Payroll vs. Workers Comp Net Written
Premiums, 1990-2014P
Payroll Base*
$Billions
$7,000
WC NWP
$Billions
Wage & Salary Disbursements
3/01-11/01
WC NPW
7/90-3/91
$50
12/07-6/09
$45
WC premium
volume dropped
two years before
the recession began
$6,000
$5,000
$40
$35
WC net premiums
written were down
$14B or 29.3% to
$33.8B in 2010 after
peaking at $47.8B
in 2005
$4,000
$3,000
$30
E
14
13
12
11
10
09
08
07
06
05
04
03
02
01
00
99
98
97
96
95
94
93
92
91
$25
90
$2,000
Continued Payroll Growth and Rate Gains Suggest WC NWP Will Grow
Again in 2015
*Private employment; Shaded areas indicate recessions. WC premiums for 2014 are I.I.I. estimates..
Sources: NBER (recessions); Federal Reserve Bank of St. Louis at http://research.stlouisfed.org/fred2/series/WASCUR ; NCCI; I.I.I.
199
ATTRACTING TALENT
Most CEOs Say that Attracting and
Retaining Talent is a Concern and
a Challenge
Insurance Industry
Employment Trends
227
Insurance Industry
Employment Trends
From 1998 through 2013, total
industry employment has stayed
in a narrow band of 2.3-2.4
million; in 2014 it rose above that
band
228
Overview of Insurance Sector
Employment Changes*
Insurance Subsector
December
January
2014
2015
Employment Employment
Change
CARRIERS
P-C Direct
524,400
525,600
+1,200
Life Direct
350,100
353,400
+3,300
Health/Medical Direct
505,300
506,800
+1,500
Title & Other Direct
76,200
76,600
+400
Reinsurers
24,900
24,900
+0
Agents/Brokers
725,400
729,000
+3,600
3rd-Party Administration
175,600
177,800
+2,200
51,800
51,100
-700
OTHERS
Claims Adjusters
*Data are through January 2015 and are preliminary (i.e., subject to later revision); seasonally adjusted.
229
U.S. Employment in the Direct
P/C Insurance Industry: 1990–2015*
Thousands
560
Sometimes the BLS reclassifies
employment within industries. When
this happens, the change is spread
evenly over a 12-month period (in
this case March 2010-March 2011.
540
520
500
480
460
'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15
*As of January 2015; not seasonally adjusted; Does not including agents & brokers.
Note: Recessions indicated by gray shaded columns.
Sources: U.S. Bureau of Labor Statistics; National Bureau of Economic Research (recession dates); Insurance Information Institute.
230
U.S. Employment in the Direct
Life Insurance Industry: 1990–2015*
Thousands
600
575
550
525
500
475
450
425
400
375
350
325
Every 4-5 years BLS reconciles its data
with census data; sometimes this
reclassifies employment within
industries. This drop, spread over March
2004-March 2005, moved some people
to the Health/Medical Expense sector.
300
'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15
*As of January 2015; not seasonally adjusted; Does not including agents & brokers.
Note: Recessions indicated by gray shaded columns.
Sources: U.S. Bureau of Labor Statistics; National Bureau of Economic Research (recession dates); Insurance Information Institute.
231
U.S. Employment in the Direct HealthMedical Insurance Industry: 1990–2015*
Thousands
525
500
475
450
425
400
375
350
325
300
275
250
225
200
175
'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15
*As of January 2015; not seasonally adjusted; Does not including agents & brokers.
Note: Recessions indicated by gray shaded columns.
Sources: U.S. Bureau of Labor Statistics; National Bureau of Economic Research (recession dates); Insurance Information Institute.
232
U.S. Employment in the
Reinsurance Industry: 1990–2015*
Thousands
48
44
40
36
32
28
24
'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15
*As of January 2015; not seasonally adjusted; Does not including agents & brokers.
Note: Recessions indicated by gray shaded columns.
Sources: U.S. Bureau of Labor Statistics; National Bureau of Economic Research (recession dates); Insurance Information Institute.
233
U.S. Employment in Insurance
Agencies & Brokerages: 1990–2015*
Thousands
750
725
700
675
650
625
600
575
550
525
500
'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15
*As of January 2015; not seasonally adjusted. Includes all types of insurance.
Note: Recessions indicated by gray shaded columns.
Sources: U.S. Bureau of Labor Statistics; National Bureau of Economic Research (recession dates); Insurance Information Institute.
234
U.S. Employment in Insurance
Claims Adjusting: 1990–2015*
Thousands
60
55
50
45
40
'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15
*As of January, 2015; not seasonally adjusted.
Note: Recessions indicated by gray shaded columns.
Sources: U.S. Bureau of Labor Statistics; National Bureau of Economic Research (recession dates); Insurance Information Institute.
235
U.S. Employment in Third-Party
Administration of Insurance Funds: 1990–2015*
Thousands
180
175
170
165
160
155
150
145
140
135
130
125
120
115
110
105
100
95
'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15
*As of January 2015; not seasonally adjusted. Includes all types of insurance.
Note: Recessions indicated by gray shaded columns.
Sources: U.S. Bureau of Labor Statistics; National Bureau of Economic Research (recession dates); Insurance Information Institute.
236
Insurance Information Institute Online:
www.iii.org
Thank you for your time
and your attention!
Twitter: twitter.com/bob_hartwig
Download at www.iii.org/presentations
237