This is the 30th anniversary of the NAIC’s annual Insurance Department Resources Report
The National Association of Insurance Commissioners (“NAIC”) has released its annual Insurance Department Resources Report (IDRR). The Report, released in two separate volumes each year, has been published annually for the past 30 years.
The first of the two-volume report focuses on the resources and regulatory activities of the 56 NAIC-member jurisdictions. This includes the 50 states plus U.S. Territories like Guam and Puerto Rico. The second volume of the report, compiled through an extensive survey of each of the NAIC member states, focuses on “… premium data [as well as providing]…ratios that demonstrate the relationships between the budget, revenue and premium data.
A snapshot of 2016
The following are six take-aways from this year’s annual report that help provide a snapshot of the past year in the insurance marketplace nationally:
- Premiums increased by 8.0% over the past year to $2.1 trillion.
- Budget levels for fiscal year 2018 are expected to increase by 0.8% from 2017 amounts and to increase by 6.9% since 2014. Total projected fiscal year 2018 budgets total more than $1.4 billion.
- As for revenues, overall revenues collected from the insurance industry increased 3.27% since 2015 to $23.4 billion in 2016.
- Total taxes collected increased by 5.0%.
- The number of U.S. domestic insurers increased from 5,926 companies in 2015 to 5,977 companies in 2016.
- The five states with the most premiums written in all lines were, in order of premium volume, California, New York, Texas, Florida and Pennsylvania. These five states accounted for 40.6% of all insurance premiums in the United States.
Premiums
The following charts take a look at aggregate premium volume in the U.S. over the last nine years.
The next chart provides a breakdown of premium volume by line of business in 2016. Property/Casualty provides approximately 26.4% of all written premium volume as measured by lines of business. Both Health (42%) and Life/Annuities (30.5%), however, actually provide more premium volume than Property/Casualty with a combined total of 72.5%.
The top ten states with the most premium written
The top five states with the most written premiums for 2016 were the following
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- California
- New York
- Texas
- Florida
- Pennsylvania
Together, these five markets accounted for 40.6%, of all insurance premiums in the United States in 2016 and remained unchanged from last year, when their combined total accounted for 39.9% of the total amount of insurance premiums.
Rounding of the remaining top ten largest insurance markets are:
- Illinois (6)
- Ohio (7)
- New Jersey (8)
- Michigan (9)
- Delaware (10)
Where Massachusetts ranks…
Mirroring its ranking for the past couple of years, Massachusetts places just outside the top ten states with the most written premium, coming in at the 11th largest marketplace.
With respect to 2016, Massachusetts had total premium revenue of $52,943,560,858, as compared to $52,118,356,523 in 2015. The breakdown of premium by lines of insurance is as follows:
- $19,085,692,051 was written in the Life/Annuities line of business,
- $13,890,495,660 in the Property/Casualty line of business, and
- $19,438,336,454 in Health.
While Massachusetts continues to have no captive insurers, its does have a healthy Excess and Surplus market with a total of $956,538,995 in premium volume for 2016. Of that $670,265,627 of that premium was U.S.-based while the remaining $286,273,368 represented Alien Excess and Surplus insurers.
As for total premium volume, Massachusetts logged $52,943,560,858 last year, an increase of $825,204,335 dollars from the total premium volume of 2015.
As has occurred in most states, the total premium levels in Massachusetts have continued to increase over the past five years, from 2012 to 2016. The following is a look at those numbers:
- 2012: $46,899,364,809
- 2013: $48,237,987,566
- 2014: $48,923,540,454
- 2015: $52,118,356,523
- 2016: $52,943,560,858
While Massachusetts continues to be a major insurance marketplace with the most innovative city in the country, it is still continues to fall outside of the top ten markets.
A look at the Massachusetts Division of Insurance
As the 11th largest insurance marketplace in the nation, the Division of Insurance is funded 100 percent by a combination of fees and assessments. The 2018 project budget for the Division is $14,130,740. This represents a -2.18% change over the 2017 budget which was $14,611,730. So while Massachusetts is the 11th largest insurance marketplace, the Division of Insurance’s budget as compared in size to other states ranks 31st.
The breakdown of the Division’s budget and expenses is 80% for Administration and Regulation expenses and the remaining 20% covering Operational expenses.
As for Revenues, here are the Division’s 2016 numbers:
- Total Revenues: $474,816,212
- Total Taxes: $346,939,244
- Fees & Assessments Collected: $127,533,343
- Fines and Penalties: $127,533,343
Regulated Entities in the Division are represented by 83 Domestic Insurers in the Commonwealth, 1,297 Licensed Foreign Insurers, 25 Domiciled Self-Insured Groups or Pools, and 6 Domiciled Purchasing Groups. Of those 84 Domestic Insurers:
- 15 represent Life/Annuities,
- 49 are Property/Casualty,
- 15 are Health, with
- the remaining two representing Fraternal insurers.
As for Foreign Insurers:
- 370 are Life/Annuities,
- 686 are Property/Casualty,
- 2 are Health,
- 27 are Fraternal,
- 17 are Title,
- 117 are Risk Retention, and
- 78 are other.
Turning to Financial and Market Conduct Exams, the Massachusetts Division of Insurance completed 107 examinations last year, with 25 being Financial Only Exams while the remaining 82 where Market Conduct Exams.
In terms of Insurance Producers, Massachusetts had a total of 123,489 Individual Licensed Producers in 2016. Of that number, 30,611 comprised Resident Producers while 92,878 were Non-Resident Producers.
There were 7,025 Licensed Business Entities Producers, which was over a thousand more than in 2016. Of that number, 2,430 were Licensed Producers while 4,595 represented Non-Resident Producers.
As for actions the Division took against Licensed Producers in 2016, Massachusetts imposed no Suspensions, 29 License Revocations, 58 Cease & Desist Violations and 1 Denial Order over the course of the past year. In total, the Division had 393 actions against Producers last year, collecting a total of $130,280 in Fines for the year. It also had two Restitution cases this year, with a total of $2,863 in Restitution.
The NAIC also noted that Massachusetts also only had 1,855 Consumer Complaints for 2016, a small number as compared to other states like New York which logged 40,951 complaints or California which received 42,878 complaints during the same time period.
