Inside Look at Insurance

BCOM 214

Andrew Calderon

May 1, 2020
This report will highlight the insurance industry at request for content on the corporate website.
Insurance as a whole is essentially protection from financial loss, but the information within this
document will help detail the different aspects of the industry, who the big players are, and what
activities go on. More specifically, the topics that will be mentioned are trends, target markets,
competitors, and public interest.

Some Forms of Insurance

Health & Medical

The role of this area of insurance provides relief for issues pertaining to the health of an
individual. According to Curran (2020), Health & Medical Insurance underwrites health and
medical and dental policies. It also provides pharmacy services while balancing a strong
connection between the health provider and individual. This area provides insurance plans and
invests insurance premiums, as well. While the health & medical insurance branch may seem
rather small, it does a lot of work in helping people maintain their general wellness.

Health insurance can be difficult to understand for some. According to Hasman, J., Chittenden,
W., & Doolin, E. (2002), an example of a contract misinterpretation was in the law case Simkins
vs. NevadaCare, Inc., where Simkins was diagnosed with breast cancer but was ultimately
denied services for her treatment. While the terms of treatment within the contract were
confused, this put an emphasis on making sure people read these guidelines and make sure they
are aware of what they are signing themselves up for.

Property, Casual, and Direct

This larger insurance area covers more of the business and side of prospective loss. According to
Gambardella (2020), Property, Casualty, and Direct Insurance involves auto and home insurance
as its top two activities. It also deals with insurance relating to workers’ compensation and
medical malpractices. Additionally, it reinsures the policies put forth from other insurance
companies. This area covers a large portion of the industry and is used virtually everywhere
among people of all demographics.

Relevant Trends

Statistics

The insurance industry is a big player in contributing to the economic activity of the USA. “In
the United States, Medicare and the Social Security Administration's programs for retirement,
disability, worker's compensation, and worker's life insurance have become dominant features of
American public policy, amounting to more than 41 percent of the federal budget” (Marmor,
2018). According to IBISWorld, Health and Medical Insurance posted a total revenue of $1.1
trillion in 2019, while Property, Casualty, and Direct Insurance accumulated a total revenue of
$690.2 billion in 2019. The amount of money that insurance brings in makes the industry one of
the bigger industries in the country.
Growth and Decline

In terms of growth within this industry, many financial areas have seen growth over the past few
years, but there was some decline as well. According to IBISWorld, both of the aforementioned
sectors of the industry saw annual growth over the last five years, however the Health and
Medical area saw a decline in the number of businesses by 2.5%, while the Property, Casualty,
and Direct area saw an increase in the number of businesses by 2.8%. Despite a small area of
decline, the insurance industry is seeing net positive growth year to year, not only in the past, but
also looking into the future.

Target Market

Buying Habits

Taking a deeper look at the buying habits within the industry, a lot of the activity is purchasing
insurance. According to Gambardella (2019), the purchases make up 55.9% of all of the activity.
In addition, the graph below shows the categorical break up of which products and services are
most used, with workers’ compensation holding almost 40% of the activity within Property,
Casualty, and Direct Insurance. While insurance is for everyone, the consensus is that older
people tend to be the target demographic since they make up a larger percentage of the global
wealth, and can therefore afford the insurance they desire.

Figure 1. Source: (https://my-ibisworld-

Who Are They?

Two of the larger competitors within this industry are UnitedHealth Group Inc. and State Farm.
According to IBISWorld, UnitedHealth Group Inc. is a health and well-being group. They
operate in all 50 states and more than 130 countries, helping more than 85 million people around
the world, making them the leader in the Health & Medical Insurance market. They make their
revenues from selling premiums, insurance, and products.

State Farm offers property, casualty, accident, health and life insurance to customers in the USA
and Canada. Every year they underwrite about 80 million policies and are the leader in the
Property, Casualty, and Direct Insurance market. They are also the number one provider of car
insurance in the United States. Together, these two companies are atop their respective insurance
markets and make up about 17% of the total market.

Public Interest

Why do people want insurance?

Insurance is a highly demanded product because many people deem it essential in everyday life.
The numbers mentioned earlier of total revenue show that insurance brings in a lot of money.
While the numbers continue to rise, the graph below shows the overall confidence that
consumers have in the industry. As shown, there has been a relative decline in the confidence
over the last few years, however that decline projects to turn into a growth in the next five years.
Figure 2. Source: (https://my-ibisworld-
com.ezproxy3.library.arizona.edu/us/en/industry/52/industry-at-a-glance#key-industry-data)

Further Research

After looking more into the industry as a whole, there are few instances within insurance where
mistakes can happen, showing some volatility within the industry. “Specifically, we pinpoint that
while certain topics are excessively studied, recent changes in the insurance field and their
impact are not touched yet. Some of these recent changes include Insurtechs, the evolution of the
direct small business insurance market, market transparency, and micro-insurance institutions.”
(Kaffash, Azizi, Huang, & Zhu, 2019). This statement shows how vast the insurance industry is.
What is thought to be discovered is only a small part of what goes on, is just the beginning of
some innovations within the insurance industry. People will be interested to know what will be
coming in the near future.

Another study points to how this industry is related to the amount of jobs available. In a study
done about employment and wages, higher insurance industry market concentration resulted in a
loss of wages and jobs (Sharma and Rotthoff, 2018). According to the report, when
concentration ratios in the insurance industry double, the number of jobs in the insurance carriers
and related activities go down by 2,330. This information is of interest to the public because even
though growth seems positive, it can sometimes be a trade-off of less opportunity.

As talked about in this report, insurance is an ongoing industry that is always in demand.
Through looking at topics such as trends, target market, and public interest, insurance is usually a
hot commodity. This information will help predict the direction of the insurance industry in the
future as well as fit the bill of providing more content on the corporate website.
 References

Curran, J. (2020, March). Health & Medical Insurance in the US. Retrieved April 22, 2020, from
https://my-ibisworld-com.ezproxy3.library.arizona.edu/us/en/industry/52411b/about

Gambardella, A. (2019, November). Finance and Insurance in the US. Retrieved April 21, 2020,
from https://my-ibisworld-com.ezproxy3.library.arizona.edu/us/en/industry/52/about

Gambardella, A. (2020, March). Property, Casualty and Direct Insurance in the US. Retrieved
April 22, 2020, from Curran, J. (2020, March). Health & Medical Insurance in the US.
Retrieved April 22, 2020, from https://my-ibisworld-
com.ezproxy3.library.arizona.edu/us/en/industry/52411b/about

Hasman, J., Chittenden, W., & Doolin, E. (2002). Recent Developments in Health Insurance,
Life Insurance, and Disability Insurance Case Law. Retrieved April 21, 2020, from
https://heinonline-org.ezproxy3.library.arizona.edu/HOL/Page?
handle=hein.journals/ttip37&id=481&collection=journals&index=

Kaffash, S., Azizi, R., Huang, Y., & Zhu, J. (2019, July 22). A survey of data envelopment
analysis applications in the insurance industry 1993–2018. Retrieved April 21, 2020,
from https://www-sciencedirect-
com.ezproxy3.library.arizona.edu/science/article/pii/S0377221719305983?
via=ihub#cebibl1

Marmor, T. (2018, December 1). Social Insurance and American Health Care: Principles and
Paradoxes. Retrieved April 21, 2020, from https://doi-
org.ezproxy2.library.arizona.edu/10.1215/03616878-7104419

Sharma, G., & Rotthoff, K. (2019, June). Impact of Market Concentration on Employment and
Wages: a Look at the Insurance Industry. Retrieved April 22, 2020, from https://search-
proquest-
com.ezproxy3.library.arizona.edu/docview/2238260020/64B08D3C37854D19PQ/16?
accountid=8360