Two attempts to quantify U.S. Insurance business in 1930
SOME insurance readers of these columns were surprized some weeks ago to find a writer trying to impress his readers with the magnitude of the insurance business, and then citing figures which failed to show the full extent of that business—by a great deal. In fact, an insurance weekly, The Insurance Field of Louisville, Kentucky, finds the writer we quoted, Mr. J. C. Royle of the Consolidated Press, some $400,000,000,000 short in his estimates.
Mr. Royle was quoted as putting total insurance coverage at $100,000,000,000. The Insurance Field points out that this mark was reached some years ago.
It says that life insurance alone totaled $100,122,000,000 away back last August. And adding to that figures presented by Gen. Frank S. Dickson of the National Board of Fire Underwriters, putting coverage under fire, marine, and allied lines at more than $228,000,000,000—why, "that gives a total coverage of over $328,000,000,000 without counting casualty, surety, and miscellaneous lines, in which the liability is contingent to such a degree as to make any definite statement of 'coverage' inaccurate if not impossible."
The Insurance Weekly goes on to quote more figures. But it first makes the incidental remark that "there is no such word as 'coverage,' altho the term is gaining recognition, and some day may call for attention from the 'Lexicographer's Easy Chair.'" And right here we can cite a definition for the benefit of The Insurance Field. The latest edition of the Funk and Wagnalls STANDARD DICTIONARY defines the word "coverage" as "the sum of the risks which an insurance policy covers."
Now for a few official figures showing the tremendous and growing bulk of the insurance business of the country. To quote The Insurance Field:
At the end of 1928 (the figures for 1929 operations are not yet available), the fire and marine companies reporting to New York State had a "total insurance coverage" of $211,971,082,126. Adding 15 per cent., to allow for 1929 business and for companies not doing business in New York, gives a present grand total of $243,766,744,445, conservatively estimated. To that add 105 billions to represent to-day's life insurance, and you have close to 350 billions total. A guess of 150 billions "coverage" for all casualty, surety and related risks would bring the total up to $500,000,000,000—just five times Mr. Royle's figure.
That vast aggregate, moreover, represents the "total insurance coverage" of only the great, old line, legal reserve companies. By including the substandard carriers, which combine the insurance of assessment liability with what they like to call insurance, that total might even tot up to a final 600 billions.
The estimate that total premium payments for next year will amount to $5,000,000,000 is also an underestimate, according to The Insurance Field, which points out that:
Premium payments were more than that year before last. In 1928 the premiums reported were, roughly, $3,250,000,000 for life insurance, $1,100,000,000 for fire, marine, and allied lines, $1,000,000,000 for casualty, surety, and the like—grand total, $5,350,000,000—according to General Dickson.
While we are on the subject of insurance, we note Merryle Stanley Rukeyser in his New York American column pointing to the demand for insurance as proof of American thrift:
For example, Americans carry twice as much life insurance as all the other peoples of the world combined, altho the United States contains only one-sixteenth of all the world's population.
And while much publicity is given to the enormous insurance policies carried by our billionaires and multimillionaires, the Cambridge Associates of Boston call attention to a recent estimate stating that out of the more than $100,000,000,000 of life insurance now in force, "over $60,000,000,000 are held by persons having an average income of less than $5,000 annually."
Source: The Literary Digest for May 24, 1930