Basic Information

  • Population: 327 million
  • Location: North America
  • Primary Language: English
  • Capital: Washington, DC

The Insurance Industry in the U.S.

The United States today boasts the largest insurance market in the world, holding nearly 30 percent of the world’s insurance premiums and leading the world in terms of insurtech and insurance innovations. It can be argued that, were it not for the insurance industry, the US wouldn’t have been able to grow and evolve at the ferocious and unprecedented pace that it did. 

Quick Background

No country in the world has evolved as quickly and expansively as the United States. According to a study by Swiss Re, Because the foundations for the modern insurance market were already well established in the UK, the US insurance market managed to evolve at a remarkably similar pace as the country itself, assisting and supporting the rapid economic and social growth the US has experienced up through the present day.

The P&C insurance industry in the US was off to a running head start well before the Revolutionary War. Afterwards, the first US joint stock insurer, The Insurance Company of North America (INA) was founded in 1792. While life insurance developed at a slightly slower pace than its P&C counterparts, the first US life insurance company, The Pennsylvania Company for Insurance on Lives and Granting Annuities, was established in 1812.

The entry of foreign insurers into the US market began with UK insurers in the mid-1800s. By the time of the Civil War and Reconstruction era, insurers from Canada, Germany, Russia, Switzerland and the United Kingdom all had a stake in the expanding US market. By the late 1800s and early 1900s, US insurers had already started to venture overseas.

In the years following WWII, the insurance market in the US was exploding, along with American culture, technology, and business. The industry also experience a period of volatility thanks to a period of overconfidence and high returns which encouraged insurers to underprice risk, which led to a liability crisis that reverberated around the global insurance market.

Despite these challenges, and the challenges that came in the form of the housing crash in 2008, massive storms like Hurricane Katrina, and periods of economic instability, the US insurance markets remains the largest in the world today. Whether or not it maintains this lead against the rise of China’s insurance market is another story.

Major Players
Auto (as of 2019)
  1. State Farm (US owned, based in Bloomington, IL)
  2. GEICO (US owned, based in Chevy Chase, MD)
  3. Progressive (US owned, based in Mayfield, OH)
  4. Allstate (US owned, based in Northfield Township, IL)
  5. USAA (US owned, based in San Antonio, TX)
  6. Liberty Mutual (US owned, based in Boston, MA)
  7. Farmers (US owned, based in California)
  8. Nationwide (US owned, based in Columbus, OH)
  9. Travelers (US owned, based in NY, NY)
  10. American Family (US owned, based in Madison, WI)
Life (as of 2018)
  1. MetLife (based in the US, based in NY, NY)
  2. Northwestern Mutual (US owned, based in Milwaukee, WI)
  3. New York Life (US owned, based in NY, NY)
  4. Prudential (US owned, based in Newark, NJ)
  5. Lincoln Financial (US owned, based in Radnor, PA)
  6. Massachusetts Mutual (US owned, based in Springfield, MA)
  7. Aegon (Dutch owned, based in NY, NY)
P&C (as of 2016)
  1. State Farm
  2. Berkshire Hathaway (US owned, based in Omaha, NE)
  3. Liberty Mutual
  4. Allstate
  5. Progressive
  6. Travelers
  7. Chubb (US owned, based in Warren, NJ)
  8. USAA
  9. Farmers
  10. Nationwide
Health (as of 2018)
  1. UnitedHealth Group (US owned, based in Minnetonka, MN)
  2. Anthem (US owned, based in Indianapolis, IN)
  3. Aetna (US owned, based in Hartford, CT)
  4. Cigna (US owned, based in Bloomfield, CT)
  5. Humana (US based, Louisville, KY)
  6. Centene (US owned, based in St. Louis, MO)
  7. Molina Healthcare (US owned, based in Long Beach, CA)
  8. Wellcare Health Plans (US owned, based in Tampa, FL)
Reinsurance (as of 2016)
  1. National Indemnity Co. (US owned, based in Omaha, NE)
  2. Munich Re (German owned, based in Princeton, NJ)
  3. QBE North America (Australian owned, based in Sun Prairie, WI)
  4. Everest Reinsurance Co. (Bermuda owned, based in NY, NY) 
  5. Swiss Re (Swiss owned, based in NY, NY)
  6. XL Reinsurance America (French owned, based in Stamford, CT)
  7. Transatlantic Re (US owned, based in NY, NY)
  8. Odyssey Re (Canadian owned, based in Stamford, CT)
  9. Partner Re (Bermuda owned, based in Stamford, CT)
  10. AXIS Reinsurance Co. (Bermuda owned, based in NY, NY)
Regulation

Insurance regulation in the US is a uniquely complicated system. Each state has its own laws when it comes to regulation, including solvency requirements, restrictions on certain products, customer protection laws, and more. The 56 different states and territories are coordinated through the National Association of Insurance Commissioners (NAIC), which oversees the US regulatory network.

Recently, an increasing number of regulations have come out concerning consumer protection in the era of big data. This is particularly true in the life insurance industry, which has the delicate issue of navigating the immense amount of personal and demographic information that’s now available to them as they write their policies. Ensuring tools and technologies like facial recognition don’t interfere with laws concerning discrimination or biased underwriting is something life insurers will need to pay increasingly close attention to, especially with regards to new regulations.

Insurtechs have a unique challenge in this space. While incumbent insurers in the US have decades, if not centuries, of experience in compliance and a strong relationship with regulators, insurtechs don’t already have this experience. On the one hand, there’s a distinct advantage to starting from scratch, since there’s no need to change any preexisting requirements and compliances. On the other hand, insurtechs don’t have this ongoing relationship and experience to fall back on, and lack of experience doesn’t mean they don’t have to play by the rules. 

To learn more about the relationship between US regulators and insurtechs, check out our interview with Nick Gerhart, Chief Administrative Officer at FBL Financial Group and long-term expert in insurance regulation.

Insurtech in the US

There are few, if any, insurance markets in the world that can boast as much insurtech innovation, funding, and success as the United States. Thanks to a robust insurance industry and rich tech talent pool, the US has one of the most mature and diverse insurtech markets in the world. 

In the many lists that highlight the top insurtech companies in the world, the US consistently ranks as the most represented market on the list. In FinTech Global’s Insurtech 100 for 2019, the US claims 39 of the companies listed. 

Major Players

The US is the global leader in insurtech, in terms of number of startups, fundraising, and innovative approaches that are changing the industry. Here are just a few:

  1. Oscar is a health insurance carrier that employs technology, design, and data to transform the customer experience from end-to-end.
  2. Lemonade is an insurance carrier start-up focusing on home & renters insurance that uses a combination of artificial intelligence and behavioural economics to improve the insurance journey.
  3. Trov is on-demand insurance platform that provides cover for items of importance, managed via an application on the user's mobile phone.
  4. Slice is an insurtech start-up offering periodic insurance specifically to support the on-demand economy. 
  5. PolicyGenius is an online comparison service providing tools to help users spot gaps in their policies to ensure they have the protection they need. 
  6. Jetty is a property insurance venture providing simple personalised cover for both landlords and tenants.
  7. Kin Insurance is a home insurer, utilising open data to improve upon customer experience. 
  8. Clover Health is a health insurer, utilising a data driven system to allow for a more in-depth personalisation. 
  9. Quilt is an intentionally simple renters insurance offering for a digital generation.
  10. Cape Analytics is a data provider drawing on computer vision, geospatial imagery, and machine learning to extract property data for insurers.
Insurtech Highlight: Kin Insurance

Chicago-based insurtech Kin Insurance uses data to create personalized home insurance policies for its customers. In addition to providing these specialized policies, Kin offers its users discounts on hardware and services to help homeowners better secure their homes. 

After receiving a customer’s home address, Kin uses over 5,000 data points from public and private sources to customize a home insurance policy, all the while ensuring customers never pay more than they need to for insurance. Kin also covers homeowners in high risk areas umbrella, hurricane, and flood insurance policies.

“We saw an industry that was living in the past and needed to be modernized for the benefit of the consumer,” says Sean Harper, co-Founder of Kin Insurance. 

Kin recently underwent a funding round that raised $47 million in new venture financing to fuel expansion and a revamped business model. It also helped them launch their homeowners insurance in Florida. The funding round was led by August Capital with significant contributions from Avanta, Hudson Structured Capital Management (HSCM Bermuda, and UChicago Startup Investment Program. 

In Florida, Kin now offers the same customized policies it offers in Texas, Georgia, and Alabama, seeking to help customers receive fairly priced and accurate home insurance and protection.

“It’s irresponsible for insurance companies to price coverage without using every bit of available data, but most simply lump homeowners together by ZIP Code,” said Kin CEO Sean Harper. “We can save people substantial time, money, and confusion while getting them accurately priced coverage that fits their specific needs.”

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