What proportion of insurance premiums are paid out as claims?
I am wondering if any industry insiders can help me understand the costs and efficiency of insurance companies. I am particularly interested in UK insurance, but if you have data for another country, that would be good too.
For every £1 the company receives in premiums, how much do the customers ultimately receive back as payout for claims?
Is there a lot of variation by policy type, e.g. Home versus Car insurance?
Anyone got any info?
Thanks
Yes, there’s a lot of variation. I’ve seen numbers for US companies, and it usually runs around this:
Personal auto, $1.07 paid out for every $1 taken in
Homeowners, $.96 paid out for every $1 taken in
Workers Comp, $1.20 paid out for every $1 taken in
General Liability $.85 paid out for every $1 taken in
Commercial Property $.75 paid out for every $1 taken in
Also in the U.S. – Health Insurance – $.99 for every $1 received.
In the US, you should be able to find out those figures from each individual state’s Department of Insurance. They do track these numbers – sometimes the information is automatically available on the state insurance website, other times you might have to request a report from the dept of insurance.
For all the complaining people do about health insurance premiums in the US, they’d be surprised to see that typically 98-99% of all premium dollars get paid out in claims.