The insurance
industry is made
up of two
distinct
segments:
life/health and
property/casualty.
Property/casualty
insurers provide
insurance for
cars, homes and
businesses.
The pie chart
above breaks
down total
property/casualty
insurance
premiums.
Commercial lines
include the
kinds of
insurance that
businesses
purchase.
Personal lines,
as the term
suggests,
include coverage
for individuals
– private
passenger auto (PPA)
and homeowners
insurance. In
the chart, PPA,
a term applied
to non-business
related auto
insurance, is
further broken
down into
liability and
physical damage,
see Introduction
to Auto
Insurance.
Homeowners
insurance
business
accounts for
about one
quarter of
personal lines
insurance and
one tenth of
total
property/casualty
insurance
premiums.
Premiums can be
accounted for in
several ways.
This chart uses
direct premiums
written (DPW),
which reflect
premium amounts
before
deductions for
reinsurance
transactions.
(Reinsurance is
insurance for
insurance
companies.)
Premiums may
also be
expressed as net
premiums
written, or
after deductions
for reinsurance.
The bar chart
above shows
homeowners
premiums over a
ten-year period.
The steady
increase
reflects a
combination of
many factors.
Some are related
to the real
estate market.
These include a
rise in the
number of homes
insured as new
homes are built
as well as an
increase in the
average size of
new homes and
additions to
older ones that
add to the
square footage.
The other set of
factors relates
to changes in
the frequency
and cost of
claims. For
example, higher
construction
costs have
pushed up the
cost of
rebuilding and
repairing
damaged homes.
The term
“homeowners
multiple peril”
refers to the
fact that
property
insurance for
homes has
evolved from
covering a
single peril --
fire --- to
covering many
causes of loss,
including
windstorm and
water damage,
theft and
homeowners’
liability to
others.
The chart above
shows the
average amount
spent on
homeowners
insurance, based
on the most
widely sold type
of homeowners
insurance
policy, the HO
3, sometimes
referred to as
an “all-risks”
policy. An
all-risks policy
covers all
causes of loss
except those
specifically
excluded in the
policy.
The bar chart
above shows how
homeowners
losses for a
given year are
distributed by
cause of loss. A
loss “incurred”
is one that has
occurred within
a given period
of time – in
this chart, a
calendar year –
regardless of
whether it has
been paid.
Changes in the
percentage
contributed by
each type of
loss from one
year to another
are partially
influenced by
large
fluctuations in
the cost of
weather-related
claims.
In most years,
fire, lightning
and debris
removal account
for the largest
dollar amount of
losses, as the
chart shows.
The chart above
shows the price
of homeowners
insurance
relative to the
price of a home.
For most people,
homeowners
insurance is a
bargain because
it protects
against the loss
of their home,
often their
biggest
investment.
The price of
homeowners
insurance
reflects the
cost of
rebuilding the
structure. This
is not the same
as the price,
which includes
the market value
of the land as
well as the
structure. In
some cases, the
price of a home
is much higher
than the cost to
rebuild. In
others, the cost
of rebuilding is
higher than the
home’s market
value.
Home prices tend
to fluctuate
with mortgage
rates, the
desirability of
a community, and
the amount of
land and housing
available.
Homeowners
insurance
premiums are
based on the
cost to rebuild
or repair a
structure and
the likelihood
of loss. The
cost of the land
is not included
in premium
calculations
because the land
remains even if
the home is
destroyed.
Travelers,
Allstate, Encompass, Deerbrook,
Metropolitan, Cumberland Mutual, Allied, AIG Friends Cove
Mutual, Progressive, Harleysville, Safeco,
General Casualty, Foremost,ZurichHartford, Commercial
Protective, Truckers, Hartford, USG, Bristol
West, Philadelphia Ins Co.Auto Insurance,
Homeowners Insurance, RV Insurance, Motorcycle
Insurance, Life InsurancePowersports
Insurance, Business Insurance, Commercial
Vehicle Insurance, Truck InsuranceAccident
Insurance, Disability Insurance, Health
Insurance, Flood Insurance, Aircraft Insurance
