Page 417 - Encyclopedia of Business and Finance

eobf_I 7/5/06 3:04 PM Page 394

Insurance

Private health insurance is coverage by a plan pro-
Top ten U.S. life/health insurance groups vided through an employer or union or purchased
and companies by revenues, 2004 by an individual from a private company. Govern-
ment health insurance includes the federal pro-
grams Medicare, Medicaid, and military health
Revenue
Rank Group/Company (in millions) care; the State Children’s Health Insurance Pro-
gram (SCHIP); and individual state health plans.
1 MetLife $39,535
2 Prudential Financial 28,343 People were considered “insured” if they were cov-
3 New York Life Insurance 27,176 ered by any type of health insurance for part or all
4 TIAA-CREF 23,411
5 MassMutual Life Insurance 23,159 of the previous year, and everyone else was consid-
6 Northwestern Mutual 17,806 ered uninsured. (DeNavas-Walt, Proctor, and Lee,
7 AFLAC 13,281 2005, p. 16)
8 UnumProvident 10,611
9 Guardian Life of America 8,893
10 Principal Financial 8,756 Most insured people (59.8 percent) were covered by
a health insurance plan related to employment for some or
SOURCE: Insurance Information Institute (www.iii.org)
all of 2004. This proportion was lower than in 2003 (60.4
percent). The percentage of people covered by health
Table 1 insurance provided by the government increased between
2003 and 2004 from 26.6 to 27.2 percent; government
insurance includes Medicare, Medicaid, and military
The insurance industry employed about 2.3 million health care. Medicaid coverage rose by 0.5 percent in
wage and salary workers in 2004. Insurance carriers 2004, while the percentage of people covered by Medicare
accounted for 62 percent of jobs, while insurance agen- remained unchanged, at 13.7 percent.
cies, brokerages, and providers of other insurance-related The top ten U.S. private life/health companies,
services accounted for 38 percent of jobs. In addition, ranked by revenues, are shown in Table 1.
about 151,000 workers in the industry were self-
employed in 2004, mostly as insurance sales agents. PROPERTY/CASUALTY INSURANCE
A wide range of types of property and casualty insurance
LIFE/HEALTH INSURANCE are provided by U.S. companies. The American Insurance
Association (AIA) is the leading trade association for this
Many insurance companies provide a variety of both life
segment of the insurance industry. There are 435 insurers
and health insurance policies. The two types, however,
in the AIA who write more than $120 billion in premi-
will be briefly discussed separately here.
ums each year. Member companies provide all types of
property-casualty insurance, including personal and com-
Life Insurance. Life insurance is purchased to protect
mercial auto insurance, commercial property and liability
dependents against financial hardship when the insured coverage for small businesses, workers’ compensation,
person, the policyholder, dies. Many life insurance poli- homeowners’ insurance, medical malpractice coverage,
cies provide for the accumulation of savings that can be and product liability insurance.
used in time of financial hardship. The Survey of Con-
The property insurance marketplace faces many sig-
sumer Finances by the Federal Reserve Board revealed that nificant challenges, including skyrocketing water-damage
69 percent of American families owned some type of life claims and manmade catastrophes (terrorist attacks), in
insurance in 2001. Americans purchased $3.1 trillion of addition to the more traditional challenges associated with
new life insurance coverage in 2004, which was 5 percent catastrophic natural disasters. The AIA’s Web site
more than in 2003. By the end of 2004, total life insur- (http://www.aiadc.org) lists current issues, as the associa-
ance coverage in the United States reached $17.5 trillion, tion describes itself as active in “shaping public policies
which was an increase of 3 percent from 2003. affecting an increasingly complex insurance marketplace.”
This association, however, while providing publications
Health Insurance. The majority of people in the United for purchase, has limited information for the inquiring
States, 245.3 million (84.3 percent of the population) had citizen. The top ten U.S. property and casualty insurers by
revenue are shown in Table 2.
some health insurance coverage in 2004. There were 45.8
million (15.7 percent) of the population without health
coverage. These figures from a U.S. Census Bureau report ORGANIZATION OF COMPANIES
were based on a broad classification of health insurance Insurers primarily operate as stock (owned by stockhold-
coverage defined operationally as: ers) or mutual (owned by policyholders) companies,

394 ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION