Insurance in the United States, a complex organization

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It accounts for 1 333 billion USD in premiums, 5 934 local insurance companies, 2 660 000 staff members, 8 357 361 insurance producers, 668 520 brokerage companies, 1 407 741 loss adjusters, a per-capita premium of 4 446 USD and an insurance penetration rate of 6.8%.

Despite its results, unmatched anywhere else, the American insurance market gives the impression of an ailing body, running out of steam. The market is in fact facing organizational and regulatory challenges that are straining its progress on many levels.

From an organizational standpoint, the American market is hardly concentrated, with a wide range of companies, mutuals, pools, associations, performing an insurance activity in an institutional framework that is completely torn apart.

Being dependent on federated States, the insurance legislation is subject to pressure from local politicians, which resulted in an unstable and changing regulation. Moreover, innumerable players are intervening at all levels: federated States, federal State, departments, various supervisory bodies and lobbies.

Ultimately, the organization of the American market seems to be very cumbersome, complex and not easy to reform due to the enormous opposition exerted by Washington.

Another constraint, the American insurance system grants the judicial power huge leverage. Judges and lawyers exert enormous influence on the market, especially with regard to consumer protection. The American liability system is regarded to be the most onerous worldwide, with compensations granted to victims and beneficiaries driving numerous companies out of business. Medical professions are heavily penalized with constantly rising health insurance costs.

The frenzied judicial machine has also affected the third party liability of directors and officers who dare no longer take decisions for fear of being subject to a lawsuit on a personal basis.

Atlas Magazine N°157, January 2019 [1]