We tend to look at individual businesses based on how they specifically affect us, but the lifeblood of our economy depends in many ways on how a business affects the population as a whole. Our national focus is fixed on the ability of business to survive as a provider of goods and services, as well as employers and as taxpayers.
Because of the tremendous pressure on the U.S. economy, this is a good time to review what we often miss about segments of business that are dealt with more on a one-to-one basis.
Georgia's insurance industry has a major impact on the state's economy that extends well beyond providing policies, collecting premiums and settling claims. It is a highly segmented industry that employs licensed professionals, pays a variety of taxes, owns municipal bonds, purchases real estate and serves its customers through financial protection.
As an employer, the insurance industry provided more that 86,400 jobs in 2007, according to the U.S. Bureau of Labor Statistics. That accounts for about $5.5 billion in compensation in just one year.
As a significant contributor to the gross state product, the insurance industry added more than $7.5 billion in 2007. In total, that represents 2.3 percent of the state's gross state product.
In addition to paying the usual taxes in Georgia, insurance companies provided more than $348.2 million in premium taxes in 2008, about one half of which goes to the state treasury and the other half to local governments.
Insurance companies invest in state and local municipal bonds that help fund road construction, schools and other public projects. These bonds also provide other businesses with the capital they need for research, expansion and other ventures. A 2007 Insurance Research Council study revealed that property and casualty insurers held more than $9 billion in Georgia municipal bonds in 2005 with educational projects comprising the largest share, 22 percent of the combined total purchased by insurers.
Insurers also help provide economic security for businesses and individuals through claims payments. In 2008, direct property and casualty insured losses reached $9.6 billion. Life insurance claims and benefits payouts in Georgia totaled another $9.6 billion in 2008.
Sadly, catastrophes are a fact of life in Georgia and other states, but the role of property and casualty insurers helps businesses and individuals to recover following these devastating events. Georgia, according to the Insurance Services Office (ISO), is No. 5 on its list of top 10 states experiencing payouts for catastrophes in 2008, with insured losses amounting to $1.04 billion. These catastrophes included Tropical Storm Fay in August and a series of tornadoes in March.
A catastrophe is defined by ISO as an event that causes $25 million or more in insured property losses affecting a significant number of policyholders and insurers.
There is much more information on the GIIS Web site about how the insurance industry supports the economy in Georgia. To review the entire report, go to giis.org/factbook/GeorgiaFactBook2010.pdf.
DAVID COLMANS IS THE EXECUTIVE DIRECTOR OF THE GEORGIA INSURANCE INFORMATION SERVICE. CONTACT HIM AT (770) 565-3806 OR DCOLMANS@GIIS.ORG.