What is General Insurance Industry?

General Insurance industry providers perform an essential function in today's economy. General insurance is typically defined as any insurance that is not determined to be life insurance. Depending on the type of occupation, risk exposure, and the money involved, the insurance could be different for each industry or business. In underwriting insurance policies, general insurers earn premiums that they further invest.

General insurance or non-life insurance policies, including automobile and homeowners policies, provide payments depending on the loss from a particular financial event. General insurance typically comprises any insurance that is not determined to be life insurance. It is called property and casualty insurance in the U.S. and Non-Life Insurance in Continental Europe.

What is General Insurance Industry?

General Insurance industry providers perform an essential function in today's economy. By covering losses from disasters, accidents, and lawsuits, property and casualty insurers protect policyholders from property damage and liability, providing the means for victims to resume their lives and businesses, and continue contributing to the economy.

Businesses in this industry initially underwrite insurance policies relating to a property, casualty, liability, and other general risks. In underwriting insurance policies, general insurers earn premiums that they then invest to generate additional income. The underwriting of life, disability, health, and medical insurance represents a separate industry, although many businesses compete in both insurance markets.

Industry Products:

Motor vehicle insurance
Fire and other property damage insurance
Pecuniary loss insurance
Freight insurance
Marine, aviation, and other transport insurance
Travel Insurance
Home Insurance
General liability insurance
Other general insurance

Industry Activities:

Directly underwriting automobile insurance
Directly underwriting property and casualty insurance
Directly underwriting liability insurance
Directly underwriting mortgage and financial guaranty insurance
Directly underwriting title and real estate insurance
Directly underwriting warranty insurance
Investing premiums earned by underwriting insurance policies

Each component of the general insurance sector represents a different type of coverage and some of them are explained below:

1. Property Insurance:

Insurance of property means insurance of buildings, machinery, stocks, etc. against Fire and Allied Perils, Burglary Risks, and so on. Thus Property Insurance is a very vast category of General Insurance and the type of cover that you need depends upon the type of property the insured is seeking to cover. Property insurance provides coverage for property from natural hazards such as floods, earthquakes, tsunamis, and wildfires; and hazards of human origin such as terrorism and theft.

2. Casualty Insurance:

Casualty insurance is insurance against accidents, and not always related to property. While the distinction has blurred over the past several years, property insurance is often linked with liability insurance and can provide protection against property damage such as automobile, homeowners, and some commercial insurance.

3. Liability Insurance:

Generally included in property and casualty insurance, liability insurance protects the policyholder from financial responsibility for injuries to others or for damage to the property of others.

4. Motor Insurance:

Motor insurance gives protection to the vehicle owner against damages to the driver/owner’s vehicle and also pays for any Third Party Liability determined as per law against the owner of the vehicle. Third-Party Insurance is a statutory requirement. The owner of the vehicle is legally liable for any injury or damage to third party life or property caused by or arising out of the use of the vehicle in a public place. Driving a motor vehicle without insurance in a public place is a punishable offense in terms of the Motor Vehicles Act.

5. Marine Cargo Insurance:

Goods in transit via Sea, Air, Railways, Roads, and Courier can be insured under Marine Cargo Insurance. Hulls of ships and boats can be insured under Marine Hull Insurance. Further, there are specialized policies available such as Aviation Insurance Policy for insurance of planes and helicopters.

6. Travel Insurance:

Travel Insurance offers insurance protection while traveling. Travel Insurance may be called by different names by insurance companies. It is important for the insured to check and understand whether the policy covers domestic travel or overseas travel or both. Travel Insurance protects the insured against travel-related accidents, unexpected medical expenditure during travel, losses such as baggage loss, loss of passport, etc. and interruption or delays in flights or delayed arrival of baggage, etc. Travel Insurance normally offers cover only during a specific period of travel. However, some insurance companies may offer various combinations of protection to cater to the specific needs of customers e.g., there could be a special policy for Corporate Frequent Travelers, etc.

Industry SWOT Analysis:

The Global General Insurance Carriers industry provides protection against the costs arising from a variety of property and casualty (P&C) events, such as auto accidents, natural catastrophes, and medical malpractice. In the five years through 2012, industry revenue declined as investment income plummeted and premium prices softened. The next five years will feature strong revenue gains. Demand for insurance will grow, hardening premium prices and investment income will pick up as investor confidence returns to global markets.

The industry's product segmentation is based on net premiums earned and does not include net investment income. In general, premium income accounts for about 90.0% of total industry revenue. The largest share of general insurance premiums originates from motor vehicle insurance, which includes both private passenger and commercial coverage. This type of insurance covers the insured for any loss incurred through damage to property or people as the result of a car accident (including theft). Individual consumers make up the larger of the two segments. “Fire and other property insurance” accounts for the next largest share at 23% of total premiums for this segment.