Overview – American General Insurance
The Property and Casualty insurance sector is dominated by intense competition where premium rates drop as insurance companies compete vigorously to increase market share. As the market settles to the point where profits diminish or vanish completely, there is a general depletion in the capital needed to underwrite new business.
At this point in the up phase of the cycle when competition is less intense and underwriting standards are harder, the supply of insurance is constrained due to lack of capital resulting in rising premiums. Gradually though, the prospect of higher profits draws more capital into the market and this leads to increased competition with the inevitable down phase of the cycle.
The P/C (Property and Casualty) insurance market cycle is therefore affected by two distinct market conditions. Soft periods during which premium rates are stable or falling and insurance is readily available, and hard periods when premium rates increase with coverage becoming more difficult to find. While the insurers� profits increase during the hard market conditions they are literally absent during soft market conditions.
Contribution of insurance to the US national economy
Contribution to GDP
Comparison with other industries
Insurers as investors
The insurance industry is a key player in the capital markets, with holdings of $ 3.5 trillion in stocks and bonds in 2005.
Property Casualty Industry Investments
Life/Health Industry Investments
Credit market assets held by investors
Ownership of corporate equities
Ownership of municipal securities
Ownership of corporate and foreign bonds
Settling the economic cost of disasters
Increasing Term meaning the death benefit gets larger throughout the term of the policy Decreasing Term meaning that the death benefit gets smaller during the course of the term
Contribution to selected industries
When P/C insurance claims are paid, funds flow to the industries that supply the claimants with the goods and services necessary for their recovery. In 2005 P/C insurers paid out over $ 300 billion to settle claims. Most of this money went to businesses that help claimants get their lives back together after an accident, fire, windstorm or other incident that caused the injury or property damage.
Role of credit/mortgage insurance
Credit insurance for short term trade receivables
Private mortgage insurance
Life insurance payouts
Workers compensation indemnity payouts
Disability insurance premiums
Contribution to state economies
Gross state products
Captives by state
Incurred losses by state
Insured cars by state
Insured homes by state
Businesses by state