Protecting businesses through various insurance policies and covers has become increasingly important in today’s volatile economic environment. Business insurance safeguards against potential risks and losses and provides security and stability for business operations.
Wading through the business protection insurance world can often seem daunting, as we’ve all grappled with such insecurities at some point. By engaging ourselves in meticulous research and focusing on key industry statistics, we’ve accumulated an array of valuable insights that could significantly lighten your load.
As we delve into the comprehensive business insurance statistics and insights, it is essential to understand the dynamic landscape of business insurance. This article aims to equip you with crucial data points about premium trends, small business claims and personal lines alike, and demographic breakdown within the industry, among other relevant topics, essentially demystifying the concept of business protection insurance for you.
Overview of the Insurance Industry
Insurance is a critical risk management tool, a significant player in the financial markets, and a vital contributor to economic development. The global insurance industry has been experiencing steady growth with total gross insurance premiums worldwide.
The data collected and analysed by the Organisation for Economic Co-operation and Development (OECD) shows a stable increase in global life insurance gross premiums at a rate of 4%. However, there was a distinct decline in global insurance premiums in 2021, as shown in the table. The combined direct premiums in the life and health insurance sectors may be higher due to potential double-counting.
|Total Gross Insurance Premiums Worldwide (in Billions)
|4,875 (Sharp decline)
In 2022, the industry bounced back with a total gross of $6.3 Trillion. The number is forecasted to reach $7.5 trillion by the end of 2023.
These figures are enlightening for business owners and marketers in the insurance industry. Analysing these trends and statistics is essential to making informed decisions for your business strategies.
Business Insurance Statistics in GDP
The insurance industry has consistently demonstrated its significant contribution to the global economy. Its relevance can be assessed through its percentage contribution to the gross domestic product (GDP).
|Percentage of Insurance Industry in GDP
The business insurance statistics in this table show the industry’s contribution to the GDP from 2017 to 2021. The steady increase from 2.6% in 2017 to 2.9% in 2021 provides an impetus for continuous growth and development within the industry. It is unsurprising that in 2022, it contributed to around 8% of the GDP. In 2023, it is expected to account for approximately 8.5%.
As business owners, marketing managers, and marketers, understanding these statistics provides a better perspective on the evolving landscape of the insurance industry and its significant role in the global economy.
Total Premiums in the U.S.
For example, the total premiums for the insurance industry in the United States have exceeded the trillion-dollar mark annually. This remarkable achievement is a testament to the vital role of insurance in the American economy and the lives of its people.
|Total Premiums (2020)
|Total Premiums (2021)
|Total Premiums (2022)
|Total Premiums (2023)
As presented in the previous table, the percentage increases in total premiums from 2020 to 2023 reveal significant growth across all insurance categories. Property/casualty insurance experienced a remarkable 33.0% increase, while life/annuity insurance saw a substantial 48.9% rise. Health insurance exhibited a notable 27.3% growth.
These figures indicate a positive and significant expansion in the insurance industry over the four years, reflecting a solid and upward trend in premiums across all sectors.
Total Commercial Lines Premium
Half of the revenue generated from U.S. property and casualty insurance is derived from commercial lines. In 2020, the total revenue reached a significant $365,382,996, which has continued to increase annually. This growth can be attributed, in part, to adjustments in rates based on risk.
Notably, there was a 4.7% increase in property-and-casualty (P&C) insurance between 2018 and 2019 alone. Furthermore, the P&C sector’s share of all global premiums expanded to one-third, underscoring the pivotal role of commercial lines in driving global market growth within the P&C sector.
Looking ahead, the data for 2022 and 2023 further solidifies the trend of increasing revenue and emphasises the enduring significance of commercial lines in shaping the P&C insurance landscape.
Statistics on Premium Increases
Premiums in the insurance industry are rising, and business owners must stay informed. Let’s look at some eye-opening statistics on premium increases and what they mean for your business protection insurance.
Premium Increase in 2021
In 2021, business insurance statistics revealed a big jump in the money spent on business protection insurance. The amount rose by 75.3%, much more than in 2020. This growth pushed up the rates of business insurance premiums.
This change didn’t come out of nowhere, though. Things like approved rate increases played a part, too. So, it wasn’t just random luck or chance that led to this increase in premium fees.
The world of property and casualty lines also saw changes in 2020. There was even more risk-adjusted rate hardening than before. This made the premium costs go up as well.
So, 2021 was essential for business insurance statistics and the overall market.
Premium Increase for Product Liability
Medical liability insurance costs are rising, too, because of higher rates for this type of coverage. Social inflation also pushes these costs up in the market. The American Market Association (AMA) found 15 states where medical liability insurance is costing more.
Premium Increase for Directors & Officers (D&O) Insurance
D&O insurance rates are on the up. This type of cover safeguards firm leaders from legal costs. Yet, it’s costing more each year. In 2020, prices rose by 41%. The following year saw a rise of 38.5%. The reason is that insurers view D&O insurance as risky.
As many as 30 out of every 40 believe this danger is growing. Many issues fuel these fears—cyberthreats, class action suits, and job matters, to name a few. So, a further price jump looks likely shortly.
Consecutive Quarters of Premium Rate Increase
The insurance industry has seen consecutive quarters of premium rate increases for commercial property and casualty (P&C) lines. This means that the insurance cost for businesses has increased steadily. For example, commercial auto insurance renewal premiums have risen for 43 consecutive quarters. Similarly, global commercial property insurance rates have increased by 4% in the first quarter of 2021.
These consistent rate hikes reflect the current trend in the insurance market, where premiums are on the rise. Insurance companies use these premium increases to account for potential future claims they may need to pay out to policyholders. The use of insurance portal software can provide a number of benefits for businesses, including increased efficiency, improved customer service, and reduced costs.
Types of Business Protection Insurance
When protecting your business, it’s crucial to consider the different available types of business insurance. Understanding the various options can help you tailor your coverage to the specific needs of your business. Let’s explore three fundamental kinds of business insurance:
1. Cyber Insurance
Cyber insurance protects businesses from the financial impacts of cyberthreats and data breaches. As technology advances, the risk of cyberattacks has become a significant concern for companies of all sizes. Cyber insurance helps mitigate the financial losses and reputational damage from these incidents.
2. Professional Indemnity Insurance
Professional indemnity or professional liability insurance is essential for businesses that provide professional services or expertise. It protects against claims of negligence or errors in the offered services. This type of insurance is vital for accountants, consultants, and other professionals who may face client liability claims.
3. Commercial Insurance
Commercial insurance, also called business insurance, offers comprehensive coverage for various risks that businesses may face. This can include protection for property damage, liability claims, business interruption, and more. Commercial insurance is fundamental to safeguarding businesses’ financial stability and continuity.
Insurance Industry Demographics
The number of employees in the insurance industry has steadily increased, reflecting growth and demand in the sector.
Number of Insurance Carrier Employees
In the insurance industry, there were a total of 2.9 million workers. Out of which, 1.7 million were women, making up 59.4% of the workforce. In the United States alone, around 2.86 million employees work in the insurance sector.
Understanding the number of insurance carrier employees is vital for analysing demographics and workforce trends in business protection insurance. It’s worth noting that women play a significant role in this industry as they form the majority of workers.
Increase in Employment
The insurance industry is expected to see an increase in employment opportunities in the coming years. According to projections, there will be an 8% growth in employment for insurance sales agents from 2022 to 2032. This means that around 48,300 job openings will be available for individuals interested in pursuing a career as an insurance agent.
The positive job outlook indicates demand and potential for career growth within the insurance industry. Additionally, it is worth noting that full-time, year-round workers are more likely to have employer-sponsored benefits coverage.
With these promising statistics, business owners and marketing managers should consider the insurance job market as they plan for their staffing needs and explore possible collaborations with insurers.
Gender Diversity in Agents and Insurance Employees
In the insurance industry, gender diversity is an important topic. Currently, women make up 58.9% of the total 2.8 million workers in insurance in the U.S. However, efforts are being made to promote equal representation and inclusive hiring practices.
It’s recognised that there is still a gender imbalance within the industry, as statistics show that people of colour and women are underrepresented in entry-level positions. To address this issue, many companies have implemented diversity initiatives and workplace inclusion programs to break through the glass ceiling and create more opportunities for all individuals in the insurance industry.
Small Business Claims Statistics
Chance of Small Business Filing a Claim
Small businesses face risks that could lead to insurance claims. Did you know that 35.2% of small business owners experienced an event last year that could have led to an insurance claim? This shows the importance of having proper insurance coverage for your business.
Surprisingly, around 29% of small business owners carry no insurance coverage, leaving them vulnerable to potential losses. It’s also worth noting that more female business owners (35%) are uninsured compared to their male counterparts.
To protect your business and mitigate financial risks, evaluating your insurance needs and ensuring you have appropriate coverage are crucial. Small business claims can arise from property damage, data compromises, thefts, or fraud. Therefore, comprehensive insurance can provide peace of mind and help safeguard your business against unforeseen challenges.
Cost of Large Fire Loss
The cost of fire damage is significant, especially for small businesses. On average, a fire claim that impacts small business owners costs around $35,000. This includes expenses for repairing or replacing damaged property and any additional incurred costs due to business interruption.
In some cases, the cost of fire damage can be even higher depending on the extent and severity of the loss. Businesses need adequate insurance coverage to protect themselves against such significant losses caused by fires.
Frequency of Fires
Fires can seriously threaten businesses, and every business owner should know the frequency of fires. In the United States alone, there are over 100,000 fires that occur annually and affect businesses. Office fires comprise 30.4% of all business fires, while hotel and motel fires account for 50%. Restaurants are particularly vulnerable, with 61% of all business fires being restaurant-related.
These numbers highlight the importance of fire prevention measures, such as fire safety training, proper fire extinguishers, regular fire risk assessments, and a well-defined fire evacuation plan. By understanding the frequency of fires and taking proactive steps to prevent them, businesses can protect themselves from potentially devastating fire damage.
Product Liability Jury Awards
Product liability jury awards can have a significant impact on businesses. In 2020, the average personal injury jury award in product liability cases was $3,908,111. Among the top 100 verdicts by dollar value, over $33 billion were related to product liability cases. These high awards indicate the potential financial risk businesses face if their products are found to be defective or cause injury.
Companies need to understand and comply with product safety regulations and invest in liability insurance to protect against compensation claims resulting from lawsuits. The cost of product liability insurance can vary widely, ranging from $700 to over $4000 annually.
Social inflation is another factor that affects the product liability insurance industry. It refers to the increasing claims costs for insurers above general economic inflation due to rising legal fees and higher jury awards. Businesses must monitor these trends closely and take proactive measures to ensure adequate protection against product-related lawsuits and associated liabilities.
Increase in Data Compromises and Cyberattacks on Firms
Cyberthreats are happening with scary frequency and an alarming increase in severity, especially for small businesses. In 2021 alone, 82% of reported ransomware attacks were aimed at small enterprises. Malware, a sinister and potentially devastating attack tool, accounted for another 18% of cyberattacks on these firms. It’s easy to assume that cybercriminals only target large corporations, but a staggering 43% of data breaches involve small businesses. This drives home the crucial importance of robust data protection and cybersecurity measures.
An Accenture study revealed that nearly 43% of all cyberattacks target small businesses. It’s a complicated truth to swallow, but without proper safeguards, around 60% of small businesses that fall victim to a cyberattack will have to close their doors within six months. The rise in data compromises and cyberattacks is not merely a trend—it’s an urgent call to action for all companies to prioritise and invest in solid cybersecurity measures.
Most Common Claims (Burglary and Theft)
Burglary and theft are the most common claims filed by small businesses regarding commercial insurance. According to a study by The Hartford, these incidents accounted for approximately 20% of all business lawsuits.
Business owners must be aware of this risk and take necessary precautions, such as implementing security measures, loss prevention strategies, and ensuring proper insurance coverage. Small and mid-sized businesses represent 68% of employee theft cases, so it’s crucial to have safeguards in place to protect against these types of crimes.
Annual Cost of Fraud
Insurance fraud is a big problem that costs the U.S. a staggering $308.6 billion each year. This includes fraudulent activity such as financial deception, scams, misrepresentation, and illegitimate claims. Sadly, dishonest practices like swindling and false insurance claims contribute to this high cost.
Fraud occurs in about 10% of property/casualty insurance losses. Business owners and marketers need to be aware of these alarming statistics and take steps to protect their companies from financial exploitation.
Personal Lines Claims Statistics
Statistics of claimed personal lines can be surprising. Let’s review their types and numbers:
Percentage of Homeowners’ Claims that are Property Damage
Property damage claims make up the majority of homeowners insurance claims. In 2021, 97.7% of all homeowners insurance claims were for property damage. This includes things like damage from fires, storms, or vandalism.
Homeowners need adequate coverage for property damage to protect their homes and belongings in case of unexpected events. Remember, having the right insurance policy can provide peace of mind and financial security in times of need.
Average Cost of Most Expensive Homeowners Claim
The average cost of the most expensive homeowners’ claims in the U.S. was $8,787 in 2022. That means if something goes wrong and you need to claim your homeowner’s insurance, it could cost you a lot of money. Property damage claims are the most common and can be expensive, too. The average property damage claim in 2020 was $13,962.
Fire- and lighting-related claims tend to be the most costly, with an average cost of $77,340. Wind and hail damage can also lead to expensive claims for homeowners. So, it’s essential to have enough coverage to protect yourself financially if something happens to your home.
Frequency of Homeowners Filing a Claim
Did you know that about 1 in 20 insured homes file a yearly claim? That’s according to the Insurance Information Institute (III). In 2020, around 6% of all insured homes had a claim. It is estimated that in 2023, about 1 in 20 insured homes will file a homeowners insurance claim.
So, the prevalence of homeowners insurance claims is approximately 5% each year. Business owners must consider these statistics when assessing their risk and ensuring they have adequate coverage for their properties.
Percentage of Auto-Owners with “Full Coverage”
According to the Insurance Information Institute (III), many auto owners opt for “full coverage” by purchasing comprehensive and collision insurance. The III states that 79% of insured drivers purchase comprehensive coverage in addition to liability insurance, while 75% buy collision coverage.
These statistics highlight the importance placed by auto owners on protecting themselves against various risks and damages beyond just having liability insurance. Full coverage can provide peace of mind for policyholders, knowing they have financial protection in case of accidents, theft, or other unforeseen events related to their vehicles.
Incurred Auto Loss
In 2018, about 6.1% of collision insurance policyholders had a claim due to auto losses, while 3.0% of people with comprehensive coverage filed claims for auto losses. This shows that car accidents and the need for auto insurance claims are common.
The average closed claim payment in commercial auto liability increased by 35% from 2016 to 2021. This rise is driven by more litigated claims and larger settlements being made. Business owners and marketers need to understand these statistics when considering insurance options for protecting their vehicles and assets against potential auto losses.
Insurance Industry and COVID-19 Statistics
During the global pandemic, the insurance industry faced significant challenges and changes. Find out how premiums were affected, life insurance claims paid, and policies increased.
Premiums Returned Due to the Pandemic
During the pandemic, insurance companies have faced a challenging situation, rejecting many policyholder claims for COVID-19-related business interruption losses. This has led to discontent among business owners who expected coverage for such losses under their existing policies.
Additionally, the COVID-19 pandemic has had a significant financial impact on the insurance industry, with profits dropping. As a result, some insurance companies have offered policyholders rebates to alleviate some of the financial burden caused by the pandemic.
For example, in the health insurance industry, rebates as a share of earned net premiums increased from 0.18% in 2019 to 0.27% in 2020. These rebates aim to provide some relief and support during these challenging times.
Life Insurance Claims Paid During the Pandemic
During the pandemic, there has been an increase in life insurance claims. However, it is essential to note that this increase has not substantially impacted the bottom line for life insurers. 20% of life insurers have reported no impact from the rise in claims due to the pandemic.
Despite these claims, the demand for life insurance increased during this time. About 31% of consumers are more likely to purchase insurance because of the pandemic. Globally, life insurance claims related to COVID-19 have reached $5.5 billion in just nine months of 2021 alone.
Increase in Life Insurance Policies
During the COVID-19 pandemic, there has been a significant increase in the number of life insurance policies. This is especially true for vulnerable older adults seeking protection and peace of mind. The pandemic has increased awareness regarding the need for life insurance coverage, leading to an uptick in sales.
Insurance companies have responded by adjusting pricing and offerings to meet customers’ evolving needs during these uncertain times. It is important to note that some individuals may have faced challenges securing coverage due to lingering health effects of COVID-19 or long-term COVID-19.
Statistics on Medical Professional Liability, Products Liability, and Directors and officers Liability
Some factors highlight the evolving landscape of corporate insurance and the need for businesses to stay informed and protected.
- Social inflation is a growing concern for insurers as claims costs rise higher than general economic inflation.
- In the medical field, changes in physician and surgeon practice arrangements have led to shifts in professional Liability.
- Directors and officers insurance also faces increased risks, such as more securities action lawsuits and coverage instability.
- Data security is crucial for directors and officers regarding their insurance coverage.
In conclusion, these statistics clearly show the importance of business protection insurance. With increasing premiums and the rising number of claims filed by small businesses, having comprehensive coverage is crucial in safeguarding against potential hazards and losses. Understanding these trends can help business owners make informed decisions about their insurance needs and ensure the continuity and security of their ventures.
What is business protection insurance?
Business protection insurance helps protect businesses from financial losses due to unexpected events, such as the death or critical illness of key employees or business owners.
Why is business protection insurance important?
Business protection insurance is essential because it provides financial security and peace of mind by covering potential risks that could impact the stability and profitability of a business.
How do I find reliable statistics about business protection insurance?
Reliable statistics about business protection insurance can be obtained from reputable sources such as government agencies, industry associations, and market research reports focused on the insurance sector.
What are some common types of business protection policies?
Business protection policies include critical person insurance, shareholder or partnership protection, and loan guarantee policies.
How much does business protection insurance cost?
The cost of business protection insurance varies depending on many factors, such as the size and nature of the business, the required coverage amount, and any chosen additional features or riders. It’s best to consult an insurer for an accurate quote based on your specific needs.