The insurance industry contributes almost $200 billion to the United States’ gross national product each year, approximately 2.4 percent of the total GNP, according to the latest edition of a study compiled by the Alliance of American Insurers.
“This is almost double the security industry’s contribution (1.3 percent) and close to the banking industry’s 3.3 percent,” said Roger Kenney, associate vice president of research for the Alliance and the study’s author.
The Alliance study, “The Insurance Industry: A Key Player in the U.S. Economy,” provides facts and figures on insurance industry employment and payroll by state, insurance industry investments and how much households spend on insurance.
“One of the study’s most unexpected findings was that the percentage of a household’s budget spent on insurance of all types declined to 6.3 percent in 1998, the latest year for which figures are available, from 6.7 percent in 1995,” Kenney said. “This indicates that despite consumerists’ claims that the cost of insurance is skyrocketing, insurance premiums are actually taking a smaller bite out of consumers’ purses.”
Other findings of the report, which is a compilation of government statistics, are:
· The insurance industry currently directly employs 2.5 million people, with a total payroll of approximately $100 billion. Of the total employment figure, 700,000 are employed by property/casualty insurers, one million employed by life/health insurers and 800,000 employed as agents, brokers and in other directly related service industries.
“In fact, if all insurance employees gathered in one place, they would create a metropolitan area larger than Pittsburgh,” Kenney said. Growth in this area is questionable, unfortunately. “Since 1996, the insurance industry’s annual job growth rate of 2.5 percent has outpaced the 1.7 percent growth rate of employment in general,” Kenney said. “However, the U.S. Bureau of Labor Statistics projects that insurance industry employment will slow to just 0.8 percent annually during the first decade of the 21st century.”
· The insurance industry held more than $2.5 trillion in corporate stocks and bonds in 1999, of which almost $400 billion were owned by property/casualty companies. Over $400 billion of U.S. government bonds were held by insurers, of which the property/casualty industry held almost $150 billion. Property/casualty insurers also owned more than $225 billion of state and local bonds.
“Insurance industry holdings of state and local government bonds totaled $227 billion, or 15 percent of those outstanding. This percentage is the largest of any financial sector except mutual funds, which held 16 percent,” Kenney said. “In addition, insurers held almost a third of available corporate bonds.” In addition to employment, insurers contribute substantially to state economies through taxes.
The insurance industry as a whole paid $9.2 billion in state premium taxes in 1998, ranging from nearly $12 million in Wyoming to $1.2 billion in California. On a per capita basis, premium taxes are highest in Hawaii ($74), Nevada ($63) and Delaware ($69).
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