Before COVID19 in 2019, gross premiums continued to grow, mainly in life and other insurance areas. The increased demand for certain life and other insurance policies (such as auto insurance) should explain the global expansion of the insurance business.
Together with Bestcarinsurancewsa we try to get, how the insurance industry helps stimulate the economy.
In some countries, the amount of compensation has also increased; however, the relatively mild year in which catastrophic claims occurred means that claims payments are not as high as in other cases.
In general, the underwriting performance of non-life insurance companies in 2019 has improved. Even after financial losses in the last quarter of 2018, the market remains optimistic; insurance companies have benefited from the stock market rebound and generally see positive returns, especially those who invest most of their assets in stocks.
There are many ways to measure what a certain productive sector contributes to the economy. In the case of insurance, this could be the fact that sums it up: the insurance industry distributes 50% of the profits it generates in a year to society.
Behind this figure, there are many others: the taxes that are paid, what is reimbursed to the shareholders, the benefits that are paid to clients, the interest offered on the bonds issued …
Let’s start with taxes, one of the elements that determine the economic importance of a sector. According to data from a study prepared by PwC and included in the, We Are Safe 2016 Report published by Unespa (formerly the Social Report of Spanish insurance), last year companies, through their insurance operations, their benefits, mishaps, and operating cost, paid 3,157 million and raised another 3,930 million for the Public Treasury.
In total, the financial wealth generated by the insurance sector in 2016 amounted to 7,037 million euros, or what is the same, the insurance guarantees a public expenditure of about 20 million every day.
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In fact, as explained by the president of Unespa, Pilar González de Frutos, in the presentation of this study, “the insurance pays considerably more taxes than it should be due to its size.”
The Corporation Tax paid by the sector, 1,625 million dollars, last year accounted for around 6% of the proceeds from this tax, while the sector’s share of GDP is 5.29%, “therefore, clearly, insurance is a sector that contributes to the public coffers in a greater proportion than in terms of GDP ”.
More data: the set of all taxes paid by the industry represents 41.1% of the profit of the companies in the sector in one year and 11% of the premiums they collect.
The insurers as a whole pay a lot to the Treasury, among other things because they also earn a lot, and in these years of crisis this industry has managed to avoid the red numbers compared to what has happened in other sectors.
There is another derivative of this good work of European insurance. The better the companies do, the more money they manage from their clients, and therefore, the more money they invest: investments in this sector evolve based on the commitments that insurance acquires based on the growth of its activity.
And the main beneficiary of these investments today is the Spanish State, which is known to all of us.
The main component of the insurance portfolio is the public debt securities. According to data from the Unespa report, as of September 30, 2016, the portfolio of these assets amounted to almost 140,000 million of the 295,000 million that the total investment represented.
In addition to being the main component, it is the one that grows the most: between January 2001 and September 2016, the public debt portfolio of insurers has increased by more than 200%.
Insurance also has a dynamic element in the economy through the multitude of providers it uses as it is a platform for the provision of services. Half a million workers and professionals earn their living thanks to insurance benefits.
This figure includes almost 58,000 home repairmen, 266,323 workers in the health sector (health insurance and traffic accidents), 145,261 repair shops, or more than 36,800 funeral service professionals.
In hard cash, the sector as a whole would have made a transfer to the repair shops of 3,241 million euros last year; expenses related to health care for people injured in traffic accidents would have been 545 million; benefits paid to repairers totaled 1,292 million, and the transfer of payments to funeral services is estimated at about 821 million.
The insurance sector, in addition to providing employment and activity to its suppliers, is also a generator of employment and quality, according to Unespa. The insurance employee is one of the best paid.
The average salary is 2,926 euros (whoever wants to compare…). In addition to earning a decent salary, the job is stable: 96.57% of employees have a permanent employment contract. The low level of temporary employment (3.43%) has been maintained even during the crisis.
The annual working day is 1,679 hours a year, with an average of 25.73 working days of vacation, according to ICEA data.
It is also important to consider the benefits that the insurance pays to its clients. For example, the total benefits for savings products in 2016 totaled 22,000 million; attended 25,805 disability cases, compensated with an average benefit of 12,935 dollars, which places the total cost at 307 million; health insurance benefits reached 5,629 million (5,752 million if the compensation component is taken into account); and for one reason or another, the Home insurance covered payments of about 8 million dollars every day.
Insurance, therefore, is doing well, and the public coffers, the State, suppliers, employees, and customers benefit from this. This is the message.
Of course, there is no doubt is that the sector is making an effort to have more visibility and improve its image in the face of society. An objective that helps a lot not to appear in the newspapers every day due to fiascos and scandals as occurs in a ‘sister sector’, such as the banking sector.
Although most of the data were taken from a study conducted in Europe particularly in Spain, the same can be said in the United States and Canada where the insurance industry is booming and providing millions of jobs to people.