Report Quantifies Insurers’ Impact on Calif. Economy

Insurance companies are an important part of California’s $1.9 trillion economy—and auto insurers play a particularly vital role, according to a new report published by the Insurance Information Network of California (IINC).

Insurers employ hundreds of thousands of people, pump tens of billions of dollars into the state economy and protect state residents against some of the costliest natural disasters nationwide, according to the report, which was prepared by the Insurance Information Institute (III).

The study’s authors say insurers contributed $34.7 billion to California’s gross state product in 2008. That added up to 1.8 percent of GSP for the state, which would have the eighth-largest economy in the world if it were its own country, according to the World Bank.

Much of that economic output came from top auto coverage providers such as State Farm and Zurich Financial Services, according to the report, which states that the approximately 24 million private passenger vehicles insured here far outnumber those in any other state.

Insurers employed more than 287,000 state residents in 2009—easily outnumbering industry employment in other states—and paid a total of roughly $20 billion in compensation, according to the report.

Property and casualty insurers in the Golden State wrote direct premiums totaling $55 billion last year—including about $19 billion for the auto insurance California motorists use to protect their assets. Life, health, accident and other coverage providers wrote $56.5 billion in direct premiums.

The report bolsters other recent research showing the economic importance of vehicle insurers. III has said that private vehicle coverage nationwide is “by far the largest line of (coverage) and is currently the most important source of industry profits.”

The state’s insurers also paid out when policyholders were involved in accidents or suffered other losses. Property/casualty claims payments in 2010 totaled more than $29 billion, with private vehicle claims accounting for more than $11 billion of that. Life insurance claims and benefits payouts added another $38 billion.

Insurers paid $2.2 billion in state taxes last year. And they have a long track record of reimbursing state residents for some of the worst weather-related catastrophes in the country.

Seven of the 10 costliest earthquakes and wildfires in the nation’s history occurred in the Golden State, according to the report’s authors.

About John Pirro
John Pirro is a licensed fire and casualty insurance agent specializing in various aspects of the auto insurance industry. He worked in the auto body repair industry before taking a reporting position at Online Auto Insurance News.

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