Property Loss Market Size

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Property Loss Market Size

Key Takeaways

  • The dollar market size of property loss in the U.S. property insurance industry in 2019 was about $67.4 billion. The frequency/number of property loss claims in the U.S. in 2019 was about 4.25 million.
  • Based on the calculations and assumptions detailed below, the approximate dollar market size of property loss in the global property insurance industry in 2019 was about $456.83 billion. The frequency/number of property loss claims globally was estimated at 28.81 million in 2019.
  • There are about 55,352 damage restoration businesses/contractors in the U.S. The industry is also estimated to employ 113,191 people in the U.S.

Introduction

  • This report provides the available data on the U.S. and global market sizes for property loss. Market sizes include both dollar values and number of claims. Notably, data had to be triangulated due to unavailability of readily available information. Also, the report offers insights into the U.S. market size for restoration contractors, with a focus on the number of contractors. Unfortunately, the global market size for restoration contractors was unavailable.


U.S. Property Loss Market Size

  • The latest available property loss data is from the 2021 Insurance Factbook published by the Insurance Information Institute (III). The report provides 2019 data, which has been used to triangulate some of the required information as detailed below.

Market Size: Value

Residential Losses

  • Homeowners insurance is part of the personal lines, and it accounted for 14.5% (or $92.97 billion of net premiums written) for P/C insurance, and 27.3% for personal lines.
  • Homeowners insurance claims/losses amounted to about $54.1 billion in 2019, a decrease from about $56.3 billion in 2018. Property damage accounted for 98.1% of homeowners property loss claims in 2018. Since this is the most recent data point available, it was used to calculate the approximate value of homeowners property loss in 2019 as follows: 98.1% X $54.1 billion = $53.07 billion.

Commercial Losses

  • Farmowners and commercial multi peril insurance policies are part of P/C's commercial lines, and they provide cover against multiple perils/losses. The former and latter policies accounted for 0.7% ($4.33 billion) and 6.1% ($38.95 billion) of the $640.1 billion U.S. P/C segment in 2019, respectively. The non-liability portion of the commercial multi peril line accounted for $23.33 billion, and it has been used in calculations since it best represents the amount spent on property damage in the line.
  • The III report does not provide any breakdowns of the losses incurred in the commercial division by lines ; therefore, the research team has calculated loss estimates for farmowners and commercial property insurance policies based on the overall ratio.
  • Losses incurred totaled $155.12 billion (or 51.83%) of the $299.3 billion commercial division. Assuming that this would also be the share of losses incurred in the farmowners and commercial multi peril insurance policies, then the value of losses incurred in the farmowners and commercial multi peril property insurance lines would be as follows:
  • Farmowners multi peril losses incurred = 51.83% X $4.33 billion = $2.24 billion
  • Commercial multi peril losses incurred = 51.83% X $23.33 billion = $12.09 billion
  • Total losses incurred for commercial lines = $2.24 billion + $12.09 billion = $14.33 billion.

Overall Losses

  • Based on the above calculations (and results), the dollar value of property loss in the U.S. property insurance in 2019 would be about = $53.07 billion + $14.33 billion = $67.4 billion.

Market Size: Frequency

Residential Losses

  • According to the III report, an average of $15,855 was paid out to homeowners in 2018, down from $16,517 in 2017. The average amount paid per homeowners claim in 2018 ($15,855) has been used in calculations since 2019 data is not yet available. Being that $53.07 billion was paid out by insurance companies for residential claims in 2019, then the number of claims would be calculated as = $53.07 billion/$15,855 = 3,347,209.08 = 3.35 million claims.

Commercial Losses

  • Neither the claim frequency nor the average amount paid per commercial property claim was available in the public domain; however, the research team assumed that the average amount paid per residential claim would be close to the amount paid per commercial property claim. This is because there is not much difference in the average costs of homeowners insurance and commercial property insurance. Also, logically, the claim amounts paid would not differ much between commercial and residential properties because buildings are structurally similar, and a certain extent of damage would have the same severity for both structures.
  • Being that $14.33 billion was paid out for commercial claims in 2019, then the number of claims would be calculated as = $14.33 billion/$15,855 = 903,815.83 = 903,816 million claims.

Overall Claims

  • Based on the above calculations (and results), the frequency/number of claims in the property loss segment in the U.S. in 2019 would be about = 3,347,209.08 + 903,815.83 = 4,251,024.91 = 4,251,025 = 4.25 million claims.

Global Property Loss Market Size

  • The overall value of the net premiums written in the global P/C market was approximately $1.508 trillion in 2019. Also, it was established that motor insurance made up about 45% (or $678.6 billion) of the $1.508-trillion global P/C insurance market in 2019. This put the value of net premiums written for property-related insurance at about $829.4 billion (55% X $1.508 trillion) globally.

Market Size: Value

  • Unfortunately, there were no further breakdowns by line or segments. To provide estimates, the research team elected to use the U.S. figures attained above as proxies for global data points. The assumption was that the share of property loss in the U.S. property insurance market would not differ greatly from that of the global property insurance market, since the U.S. represented about 42.45% ($640.1 billion/$1.508 trillion X 100) of the global P/C market.
  • Based on the above findings, property loss incurred represented 57.08% ($53.07 billion/$92.97 billion X 100) of the net premiums written for residential property insurance in the U.S. Also, property loss incurred represented 53.07% ($14.33 billion/($4.33 billion + $23.33 billion) X 100) of the net premiums written for commercial property insurance in the U.S. Therefore, the average share of losses incurred to net premiums written for property insurance was = (57.08% + 53.07%)/2 = 55.08%.
  • Assuming that the same percentage would apply on a global scale, then the dollar value of property loss in the global property insurance in 2019 would be = 55.08% X $829.4 billion = $456.83 billion.

Market Size: Frequency

  • Using the assumptions explained above, the research team also leveraged the frequency data calculated for the U.S. to triangulate estimates for the global market. The figures found are estimates, and should be treated as such, because the average value of claims may differ by country or region.
  • Being that the $67.4-billion U.S. property loss market generated 4.25 million claims, then the frequency/number of claims in the $456.83-billion global property loss segment in 2019 would be = (4.25 million claims X $456.83 billion)/$67.4 billion = 28.80626 million claims = 28.81 million claims.

U.S. Restoration Contractors Market Size

  • According to a paywalled report by IBISWorld, there are about 55,352 damage restoration businesses in the U.S. The industry is also estimated to employ 113,191 people in the U.S.
  • Based on a 2019 survey by Clear Seas Research, 84% of contractors were from independent restoration companies, 13% from franchises, and 3% from 'other' options.
  • Also, on average, contractors reported that about 79% of the handled restoration jobs were private work, while 21% were via third-party administrators (TPA). That represented a 2% increase in private work, and a decrease in TPA work.
  • About 62% of restoration jobs in 2019 were residential. Institutional and commercial jobs accounted for the remaining 38% of restoration jobs in 2019.
  • In 2019, 12%, 18%, 25%, 11%, and 13% of restoration companies recorded over $20 million, $5-$19.9 million, $1-4.9 million, $500,000-$999,999, and $250,000-$499,000, respectively.
  • While no publicly available market research reports or industry-focused resources provide data for the dollar market size of the property restoration industry, Restoration 1, a restoration franchise, estimates that the industry generates $210 billion annually. Another restoration franchise, Stop Restoration, states that the restoration industry earns over $200 billion annually.

Research Strategy

To provide the U.S. and global market sizes for property loss, the research team searched through the public domain for data from market research reports, statistics resources, and media resources. However, only one resource from McKinsey provided some general, though useful, data on the overall global property insurance market. We then extended our research to industry-focused resources and we found a report titled 2021 Insurance Factbook published by the Insurance Information Institute (III). The report provides 2019 data, which has been used to triangulate information regarding the U.S. market, and subsequently, the global market, as detailed above. We have explained our assumptions and logic throughout the calculations.
Similar strategies were also used in our efforts to find the U.S. market size for restoration contractors. We managed to find the number of restoration business (contractors) and employees from a paywalled IBISWorld report. However, searching through industry-focused databases produced publications by Restoration & Remediation highlighting data from a paywalled report by Clear Seas Research. Additionally, we also explored government databases in case they contained the required information, which would be considered more credible that IBISWorld's data. However, only data for the overall construction company was available from the Bureau of Labor Statistics.
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