Insurers Boost California Economy by $27.3 Billion

California has a $1.6 trillion economy that ranks it as a global financial power, thanks in part to a multi-billion dollar boost from the insurance industry, according to a new report by the Insurance Information Network of California.

In its review of the most recent figures, IINC said insurers contributed $27.3 billion to California’s gross state product (GSP) and accounted for 300,000 jobs in the state. In 2005, insurers contributed $296.1 billion to the nation’s $12.4 trillion gross domestic product, accounting for 2.4 percent of total GDP.

The report also indicated:

• Insurers provide 300,777 jobs in California, accounting for $22 billion in compensation. The insurance industry provided 2.3 million jobs in 2006 nationwide.
• In 2005, property/casualty insurance claims payments totaled $26.4 billion in California. The figure was more than $250.7 billion nationally.
• California collected $2.2 billion in premium taxes in 2005, nearly 15 percent of the national total.
• Life insurance claims and benefits payouts totaled $42.9 billion in California, and $428.3 billion nationally.
• Insurance companies invest the premiums they collect in state and local municipal bonds, providing funding for local infrastructure and public projects. Insurers also provide capital for research, expansions and other ventures through their investments in corporate equities and bonds. At the end of 2005, the total combined value of all state municipal bonds held by property/ casualty insurers was more than $25 billion. Education-related municipal bonds in the state accounted for more than 30 percent of the total number of bonds held by insurers, and 30 percent of the total combined value of all municipal bonds held by insurers.

“Insurance affects everything and everything affects insurance. It is generally understood that insurance allows people to produce goods and services without the fear that some adverse incident could leave them destitute or unable to function. However, few people are aware of the extraordinary impact the industry has on state, local and national economies,” IINC said. “From auto insurance to homeowner insurance to business insurance, insurers provide millions of Californians with a blanket of security underwriting risks and contributing to the state’s economic engine,” the association continued.

To view a copy of the report, visit www.iinc.org.