Insurance Statistics

Insurance statistics play an important role in the insurance business. Insurers rely heavily on numbers in carrying out business. All insurers employ professionals called actuaries to design insurance plans, set premiums, evaluate reserves, assess business and financial risks and calculate amounts needed to meet claims. The actuaries use mathematical techniques and a variety of data to perform their duties and identify insurance statistics.

Insurers also use insurance statistics to measure their own performance. Insurers compare their performance with targets, industry averages and data relating to competitors. Increasingly insurers are using analytic software to ensure better value from insurance statistics. Investors, lenders and credit rating agencies also find insurance statistics useful for assessing the performance of an insurance company.

Insurance statistics are compiled at three levels:

• Macroeconomic
• Industry
• Corporate

The dividing line between these three groups is thin as most insurance statistics serve more than one purpose. Insurance statistics from a macro-economic perspective are; total insurance gross premiums; density of the insurance industry; retention ratio; premiums per employee; and foreign insurers’ share in the domestic market.

The density of the insurance industry, gross premiums divided by population, indicates the average per capita spending on insurance. Related insurance statistics such as per capita life and non-life premiums throw light on the structure of the insurance industry. Other metrics which highlight structural features of the insurance industry are percentage shares of life and non-life premium in total gross premium.

What is included in insurance statistics?

Insurance statistics, at an industry level, include gross and net premiums written, capacity, policyholder surplus, incurred losses, direct premiums written, revenue, earnings, earned premiums, underwriting gain\loss, investment income, losses incurred, expense ratio, return on equity, and combined ratio among others.

The combined ratio, for instance, is the percentage share of claims incurred, operating and dividend expenses in net premiums written. The insurance industry strives to bring the combined ratio under 100, which indicate a surplus after accounting for claims incurred, operating and dividend expenses.

At the industry level, key insurance statistics differ from segment to segment. One of the key insurance statistics in the property and casualty insurance segment is catastrophic losses. The catastrophic losses include losses from natural and man-made disasters. The US property and casualty insurance industry, for instance, incurred insured losses worth US$20 billion due to 9/11 terrorist attacks.

At a corporate level, key insurance statistics include revenues; earnings; gross\net premiums written; outstanding claims provisions; and capital and retained earnings. However, analysts caution against blind reliance on insurance statistics due to recent surfacing of accounting regularities at AIG. Some analysts say that non-financial parameters such as domicile, regulation, shareholders, classes written and management details convey better insights into insurers.

Insurance statistics help insurers minimise risk and bring them closer to investors, lenders, regulators and consumers.