The Insurance Industry group includes five sub-industries. Each has unique characteristics, but all are involved in the business of transferring risk. Further, the core of the group is Life & Health Insurance (L&H) and Property & Casualty Insurance (P&C). The other three sub-industries are derivatives of these two: the Brokers sub-industry sells the insurance, Reinsurance offers insurance to insurers and Multiline Insurers is a combination of insurers.
Accordingly, in most major global indexes, the largest sub-industries are typically L&H and P&C, combined averaging about 70% of the Insurance weight.1 Additionally, because most insurance industries are similar across the globe and the US is the world’s largest insurance market (about 35% of the global market),2 much of this chapter will focus on the US.
This chapter covers the characteristics of the two major sub-industries but also touches on the smaller groups. Topics include:
First, what is insurance? An insurance contract is the transfer of risk—a legally binding agreement between an insurer and an insured whereby the insurer will indemnify the insured in exchange for a fee. Insurance ...