The American insurance market, the world’s number one market

China began from a very low base, which explains this exceptional growth rate. These figures do not call into question the strength of the American market.

The domination of the United States over the global insurance market has gathered momentum during 2000-2021 period. The American underwriting share went up from 25% of the global premiums in 2000 to 40% by the end of 2021.

Over a shorter period, that is, from 2011 to 2021, global premiums rose by 49%. The United States, whose growth was threatened by the subprime crisis, recorded a 65% increase in premium volume during that same period, a long way from the rates achieved in the early 2000s.

The Chinase insurance market, on the other hand, has slowed its growth rate, but still recorded a 213% surge. Japan, caught up in a long-term economic crisis, witnessed a significant decline with its premium volume declining by 38%.

The American insurance market: well-balanced life and non-life activities

Globally, life insurance premiums accounted for 41% of the total premiums in 2021. This proportion stood at 48% in 2000 and 47% by the end of 2011.

In the United States, non-life activities (including health and accidents risks) dominated the American market with 59% of total premiums in 2021. Still in the USA, this non-life business had a 51% market share in 2000 and 52% in 2011.

In millions USD

Sources: NAIC and Sigma

The American insurance market: Evolution of life and non-life penetration rate

The penetration rate is an interesting indicator used to evaluate the importance and the weight of the insurance activity in a country or region. At a global scale, insurance is decreasing in the GDP. Between 2000 and 2021, the global penetration rate went from 7.3% to 7.0% for both life and non-life insurance.

The analysis by major classes of business indicates that this decline is due to the decline in life insurance activity whose penetration rate dropped from 4.6% in 2000 to 3.0% in 2021. The non-life sector on the other hand, gained 1.2 points, rising form 2.7% in 2000 to 3.9% in 2021.

According to the penetration rate analysis, the major European and Japanese markets were in decline over the period 2000-2021. Only China stood out with a penetration rate growth of about 160% between 2000 and 2021 (1.5% in 2000 and 3.9% in 2021).

In the United States, in 2000, the two classes of business, life and non-life, each represented 4.2% of GDP. By the end of 2021, life insurance fell to 2.6% while the non-life activity progressed to reach 9.10%.

Penetration rate of the main markets: 2000-2021

The American insurance market: Evolution of life and non-life insurance density

The highest per capita insurance consumption is in the United States with 8 193 USD per person in 2021. This was not always the case in the past. In 2000, a Japanese person has underwritten 4 027 USD of insurance premiums per year, while an American was only at 3 076 USD.

Remarkably, the growth in density is mainly attributed to the non-life class of business (including health), which went from 1 529 USD in 2000 to 6 356 USD in 2021, a growth of 316%. The life activity has grown by only 19% in 21 years, or about 0.9% annually.

Insurance density of the main markets: 2000-2021

Figures in USD

Sources: Sigma

The American insurance market and GDP

Penetration rate, insurance density and GDP growth are correlated. In fast growing economies, there is often an increase in demand for insurance products, which is reflected by a higher penetration rate. The growth of the insurance industry can then exceed the growth of overall GDP.

Evolution of the American GDP and insurance growth rates

⁽¹⁾ Growth measured from the year Y and Y-1
Source : Sigma

The American insurance market from 2007 to 2017

The American insurance market comprises two main classes of business: life and health on the one hand and property and casualty (non life) on the other.

Growing steadily over a long period of time, that is, 6.5% on average per year between 2011 and 2021, the development of the American market, all classes of business included, has been disrupted by the COVID-19 crisis. The pandemic has had a significant impact on the insurance industry.

On a short-term basis, the industry was faced with a wave of business interruption claims, as well as an increase in mortality claims for life insurance policies. Within a year, between 2020 and 2021, life and health premiums grew by 7.6%, while property and casualty premiums declined by 9.2%.

The U.S. market by major classes of business

The American insurance market includes:

• Life companies and fraternal companies. Companies such as MetLife, Prudential and Anthem are key players in the life market. Fraternal companies are non-profit affinity companies that provide insurance services to their members: death, disability and health coverage.
• Health insurance companies are a key component of the U.S. insurance market. These companies provide coverage for health risks including illness and injury. The leaders in this sector are UnitedHealth Group, Cigna and Humana.
• Property & Casualty, which includes liability and property insurance, is the largest insurance market in the United States. This class of business underwrites a wide range of risks, including natural catastrophes and home equity coverage.

Evolution of premiums: 2011-2021

In millions USD

Source: NAIC data

With a share of almost 41%, the life class of business accounted for 1 113 billion USD of premiums in 2021. This activity's market share in the total American premiums has been decreasing since 2011. In ten years, life premiums have only evolved by 41.7%, while the non-life ones have grown by 61.1%, with stable market shares; 27.06% in 2011 to 26.34% in 2021.

It is the health class of business, with a 115.1% growth between 2011 and 2021, that is driving the current growth of the American market.

In millions USD

Source: NAIC data, iii.org

Main highlights : 2000-2021