III - CONSTRUCTION INDUSTRY

CONTRIBUTION TO SELECTED INDUSTRIES

THE INSURANCE INDUSTRY’S CONTRIBUTION TO THE CONSTRUCTION INDUSTRY

The construction industry benefits from claims filed under homeowners and commercial property insurance policies.

CONSTRUCTION INDUSTRY, 1997 AND 2002

	1997	2002
Number of establishments	656,434	710,307
Receipts/revenues ($000)	$858,581,046	$1,196,555,587
Annual payroll ($000)	$174,184,604	$254,292,144
Number of employees	5,664,840	7,193,069
Source: U.S. Department of Commerce, Bureau of the Census.

INCURRED LOSSES FOR HOMEOWNERS MULTIPLE PERIL INSURANCE, 2001-2005

($000)

NUMBER OF INSURED HOMES, 1999-2003

Year	Number of insured homes (1)
1999	53,282,532.4
2000	54,255,894.5
2001	56,198,785.0
2002	57,151,093.9
2003	57,378,680.7
(1) Written exposures, calculated in house-years (equal to 365 days of insured coverage for a single dwelling). Represents homeowners package policies HO-1, 2, 3, 5 and 8. Source: Reprinted from 2003 Dwelling Fire, Homeowners Owner-Occupied, and Homeowners Tenant and Condominium/Cooperative Unit Owner’s Insurance, published by the National Association of Insurance Commissioners. Reprinted with permission. Further reprint or redistribution strictly prohibited without written permission of NAIC.

INCURRED LOSSES FOR COMMERCIAL MULTIPLE PERIL INSURANCE, 2000-2004 (1)

($000)

Year	Incurred losses (2)
2000	$7,745,840
2001	9,052,998
2002	7,690,208
2003	7,520,913
2004	8,928,329
(1) Nonliability portion. (2) Losses occurring within a fixed period, whether or not adjusted or paid during the same period. Source: NAIC Annual Statement Database, via National Underwriter Insurance Data Services/Highline Data.

INCURRED LOSSES FOR FIRE INSURANCE, 2000-2004

($000)

Year	Incurred losses (1)
2000	$3,149,959
2001	3,522,859
2002	3,230,500
2003	4,089,863
2004	3,060,411
(1) Losses occurring within a fixed period, whether or not adjusted or paid during the same period. Source: NAIC Annual Statement Database, via National Underwriter Insurance Data Services/Highline Data.

WHERE THE PREMIUM DOLLAR GOES, HOMEOWNERS INSURANCE, 2006

PREMIUMS EARNED:			$100
CLAIMS:
Property damage:
Fire and lightning	$17
Wind and hail	14
Water damage and freezing	10
All other property damage (1)	4
Theft	2
Subtotal		$47

Liability:
Bodily injury and property damage	$2
Medical payments and other	1
Subtotal		$3
Costs of settling claims	8
Total claims		$58

EXPENSES:
Commissions and other selling expenses	$22
General expenses (costs of company operations)	6
State premium taxes, licenses and fees	3
Total expenses		$31

Claims and expense total			$89

BOTTOM LINE:
Investment gain (2)			$7
Pretax income ($100 - $89 + $7)			18
Tax			6
Income after taxes			$12
(1) Includes vandalism and malicious mischief. (2) Includes interest, dividends, and realized capital gains. Source: Insurance Information Institute estimate based on data from ISO and the National Association of Insurance Commissioners (NAIC) Annual Statement Database, via Highline Data, LLC. Copyrighted information. No portion of this work may be copied or redistributed without the express written permission of Highline Data, LLC.

In 2006 claims accounted for $58 of every $100 of homeowners insurance premiums earned, down from $75 in 2005.
Expenses—including commissions, general overhead expenses, state premium taxes, licenses and fees—accounted for $31 of every $100 of premium earned
Property damage and theft claims accounted for 81 percent of all claims payments. Liability claims accounted for 5 percent. The cost of settling these claims accounted for the remaining 14 percent of total claim costs.