Where the Homeowners Insurance Premium Dollar Goes in US

Homeowners insurance accounted for 11% of all P/C premiums and 21% of all personal lines insurance in 2000.

In 1999 (latest US figures available at close of publishing) claims accounted for $75 of every $100 earned in homeowners insurance premiums in the US, down from $77 reported in 1998.

US expenses—commissions, state premium taxes, general overhead expenses—accounted for $30 out of every $100 in premium dollars earned in 1999 (compared to $32 in 1998).

1999 investments added $11 to income, compared to $12 in 1998. The bottom line worked out to $4 after-tax profit for every $100 in premiums in the US, which is up from the $2 reported in 1998.

Of note, property damage claims and theft in 1999 accounted for 79% of claims payments (74% in 1998), and liability claims accounted for 6% (10% in 1998). The cost of settling these claims in 1999 accounted for the remaining 15% of total claim costs, compared to 16% in 1998.

(1) Includes vandalism and malicious mischief
(2) Includes interest, dividends and realized capital gains on all assets
(3) Based on 35% corporate tax income
* Not included as a line item in 1999

Source: Estimated by the Insurance Information Institute (III), based on data from Insurance Services Office, Inc. and the National Association of Insurance Commissioners

Note: These charts are based on every $100 of revenue plus investment income of $11, for a total of $111. Percentages are rounded up and therefore don’t necessarily equal 100%.