Insurance Spend in the United States

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Insurance Spend in the United States

Top five expensive and five most affordable states for auto, life, and home insurance markets as well as their market size have been provided below. We have also curated and presented pieces of information, data, and/or statistics surrounding the change in Americans' insurance spending patterns before and during the COVID-19 pandemic. Finally, we have also provided a demographic profile for US insurance consumers and some of the current technology trends impacting the insurance industry.

Auto Insurance

  • According to a study by Bankrate, the national average cost for auto insurance is $1,716. Another study by the Zebra revealed that car insurance rates between 2011 and 2018 increased by 23% after which it has been going up by 2.3% per year. Moreover, in the last eight years, rates in 15 states have increased by approximately 40% with some going up by as much as 80% while 10 states saw their rates dropping by up to 20%.
  • Bankrate further stated that factors such as vehicle type, driving history, and age can impact the cost of auto insurance.
  • Below is the average annual auto insurance premium by state according to the 2019 State of Auto Insurance Report compiled by the Zebra.
  • Top Five Expensive States for Auto Insurance

  • Michigan: $2,693
  • Louisiana: $2,339
  • Rhode Island: $2,110
  • Florida: $2,059
  • Nevada: $1,915
  • Five States With the Lowest Average Annual Premiums for Auto Insurance

  • Maine: $896
  • Virginia: $918
  • North Carolina: $947
  • Iowa: $988
  • Idaho: $1,018
  • The report compiled by Zebra further revealed that Detroit, New Orleans, Hialeah, Miami, and New York were the most expensive cities for auto insurance at $5,464, $3,686, $2,913, $2,913, and $2,814 respectively. The least expensive cities were Winston-Salem, Boise, Greensboro, Raleigh, and Durham at $846, $913, $936, $948, and $951 respectively.
  • Another report on car insurance rates by state by showed that Michigan still came first in 2020 followed by Louisiana, Florida, Texas, and California at $2,878, $2,389, $2,239, $2,050, and $1,968 respectively. On the other hand, Maine, New Hampshire, Ohio, Wisconsin, and Idaho were the least expensive states at $912, $985, $1,034, $1,049, and $1,062 respectively.

Life Insurance

  • According to data from S&P Global, life insurance is astonishingly affordable with the average cost of life insurance being $44 per month and $538 per year.
  • Whether one pays for whole or term life coverage, age, sex, health history and medications, and smoking history are some of the factors that can influence life insurance rates.
  • Below is the average annual life insurance premium by state according to Business Insider.
  • Top Five Expensive States for Life Insurance

  • New Jersey: $732
  • Connecticut: $724
  • Massachusetts: $718
  • Maryland: $712
  • New Hampshire: $708
  • Five States With the Lowest Average Annual Premiums for Life Insurance

Home Insurance

  • According to the National Association of Insurance Commissioners (NAIC), the average cost of homeowners insurance in the US as a whole is $1,445 per annum. The NAIC also stated that home insurance rates in the US have gone up by approximately 47% in the last 10 years.
  • However, the amount a homeowner will pay for insurance is often dependent on the value of the home, its location, and the coverage level the consumer chooses.
  • Additionally, by taking measures such as adding safety features in a home, a homeowner might save some money as the measures have the potential to reduce homeowners' insurance premiums.
  • Below is the average annual homeowners' insurance premium by state, according to ValuePenguin.
  • Top Five Expensive States for Home Insurance

  • Oklahoma with an average insurance cost of $2,559.
  • Kansas with an average insurance cost of $2,461.
  • Texas with an average insurance cost of $2,451.
  • South Dakota with an average insurance cost of $2,364.
  • South Carolina with an average insurance cost of $2,321.
  • Five States With the Lowest Average Annual Premiums for Home Insurance

  • Delaware with an average insurance cost of $598.
  • Vermont with an average insurance cost of $614.
  • Pennsylvania with an average insurance cost of $640.
  • Utah with an average insurance cost of $711.
  • New Hampshire with an average insurance cost of $773.

The Market Size for Home, Life, and Auto Insurance Markets

    Home Insurance

  • A report by Mordor Intelligence stated that the US home insurance market has been steadily growing for years. In 2015, the home insurance market size was $89 billion and it increased to $91 billion in 2016, $94 billion in 2017, and $104 billion in 2018.
  • According to an IBISWorld Homeowners' Insurance in the US report, the market size for home insurance in 2020 is $105.7 billion. The report further stated that the market is expected to grow at a rate of 1.3% in 2020.
  • The Mordor Intelligence report further stated that the US home insurance market is expected to reach approximately $125 billion by 2024 at a CAGR of 5.7%.
  • Auto Insurance

  • The US auto insurance market size in 2020 is $308.8 billion according to IBISWorld. However, the market’s size is expected to decline by 1.4% in 2020.
  • IBISWorld also stated that the US commercial auto insurance market size in 2020 is $46.6 billion and it is expected to grow by 0.7% during the same period.
  • Additionally, according to a Mordor Intelligence report on the US motor insurance market growth, the auto insurance market is expected to grow at a CAGR of 3% between the years 2016-2025.
  • Life Insurance

  • The Insurance Information Institute stated that the US life/annuity insurance sector had a market size of $600.6 billion in 2018.
  • In 2020, the US life/annuity insurance market size is $868.5 billion according to a report by IBISWorld. Moreover, the market is expected to grow by 1.6% during the same period.
  • A report by Mordor Intelligence also reported that the life and non-life insurance market in the US is expected to grow at a CAGR of 6% between the years 2020 and 2025.

Americans' Insurance Spending Patterns Before and During the COVID-19 Pandemic

  • After the pandemic hit, there has been a shift in how Americans are spending their money, with health and hygiene products being bought way more than usual. However, people are also spending more on insurance generally. According to a survey carried out in late May this year and published on Statista, Americans have spent up to 4% more on insurance due to the COVID-19 pandemic.
  • An article by Forbes also reported a spike in life insurance shopping. According to the article which terms the spike as panic shopping, Fabric Life Insurance reported a 50% increase in applications for life insurance from mid-February. Additionally, LifeQuotes, a national online life insurance agency, reported a 29% increase in applications from January 20 this year.
  • A LIMRA survey of 47 US insurers to determine the impact of COVID-19 on individual life insurance sales and applications also stated that 24% of the companies reported a rise in the number of mobile and online applications in March. A further 7% reported an increase through face-to-face applications and 9% in call centers. However, 63% either reported no change or a decline.
  • Nevertheless, despite the spike in life insurance activity reported at the beginning of the pandemic, the numbers have gradually been decreasing in recent months. The MIB Life Index which measures the application activity of life insurance in the US reported that January and February had the highest demand for life insurance since 2015. However, the numbers dropped by "6.7% in March and a further 5.5% in April, a year-on-year fall of 2.2% in March and 3% in April."
  • Between January and early March, there was a 7% year-on-year growth rate in US auto insurance shopping. This rate however started declining and on March 16 it reached -11%, the lowest level in more than ten years. Fortunately, since then, the rate has bounced back to 8% according to data from LexisNexis.
  • Data from the LexisNexis Insurance Demand Meter also showed that while auto insurance shoppers aged 55 and older grew their growth rate by 32%, shoppers under 35 years were impacted the most as their growth rates declined by more than 20%. However, auto insurance shopping has bounced back to its pre-COVID growth rate.
  • The volume of new business for auto insurance shopping also decreased at unprecedented rates. For the first quarter of 2020, volumes decreased by 52% in comparison to the same period last year. Chris Rice, senior director of analytics at LexisNexis Risk Solutions said, “The year started with the highest shopping rate ever, with 41% of all policies having been shopped in the past year. But it became clear that COVID-19 started to affect auto insurance shopping activity in mid-March...Not only did shopping volumes decrease, but new business volumes dropped even more as most carriers offered short term rebates to existing customers, making it difficult for consumers to find lower premiums with a new carrier.”
  • Although states across the US are handling COVID-19 differently, the National Association of Insurance Commissioners (NAIC) asked the states to come up with continuity plans for home insurance consumers. California, for example, is offering a 60-day deferral for premium payments, thus consumers cannot be canceled because of non-payment within this period.
  • Several home insurance companies are also offering a temporary suspension of payments to their customers. Andy Taylor, general manager of Credit Karma Home, said that most insurers are doing it and termed it the pro-consumer thing to do. Liberty Mutual also said they have “empowered employees to work with individual customers to provide personalized support. For auto and home insurance customers who are negatively impacted by coronavirus, we are extending payment dates and waiving fees.”
  • According to CNBC, the once ignored travel insurance market is gaining popularity as more and more people are buying it during the COVID-19 pandemic. InsureMyTrip’s Director of Marketing & E-Commerce, Cheryl Golden, said: “Now, more people than ever are aware of travel insurance and how it could possibly help them.” She says that her company is already seeing an increase of 6% in vacation-unit rentals compared to last year.
  • Golden stated that adverse events have always brought about an uptick in travel insurance sales. For instance, before the 9/11 attack, only 7% of travelers bought travel insurance, but this percentage increased and hit 15% in post-attack sales. She also said that her company estimates that 25% to 30% of travelers will buy travel insurance henceforth.
  • Another survey by IPX 1031 showed a dismal 27% of Americans have taken a vacation since the pandemic began and only 20% are planning on taking one. A further 64% said they are concerned about flying saying they don’t feel safe using commercial planes. As a result of the high uncertainty revolving around travel, more travelers have opted to spend money on travel insurance with 58% buying traveler’s insurance instead of canceling their vacations.

Demographic Profile of US Insurance Consumers

  • After exhaustive research, we were not able to get the demographic profile of US insurance consumers. However, during our search, we found an overview of Americans without health insurance coverage in 2018 which we included in the report. According to a report released by the U.S. Census Bureau in September 2019, 8.5% or 27.5 million Americans did not have health coverage in 2018 at any point of the year. Additionally, the percentage of Americans who had health insurance coverage for the whole or part of 2018 was 91.5% compared to 92.1% in 2017.
  • Age

  • In 2018, American adults aged 65 and over had the highest health insurance coverage at 99.1% Out of this percentage, 94.1% were covered by a public plan while 52.4% had private plans.
  • Children aged 18 and below came second at 94.5%. Out of the 94.5%, 61.8% had private health insurance coverage while 35.7% had public coverage. Adults aged 19 to 64 came in last at 88.3%.
  • Additionally, according to the Kaiser Family Foundation (KFF), while the number of uninsured people among the non-elderly population had been steadily decreasing from 2010, the number started going up again in 2017.
  • Another report by Gallup broke down the increase in uninsured Americans by age groups.
    • 21.6% of Americans aged 18-34 were uninsured in 2018 compared to 16.8% in 2016.
    • 13.7% of Americans aged 35-64 were uninsured in 2018 compared to 11% in 2016.
    • 16.3% of Americans aged 18-64 were uninsured in 2018 compared to 13.1% in 2016.
    • 3.7% of Americans aged 65+ were uninsured in 2018 compared to 2.3% in 2016.


  • The Gallup report further revealed that although the rates of both uninsured men and women also rose between 2016 and 2018, the number of American men who were uninsured in 2018 was more than that of women. 14.5% of men were uninsured in 2018 compared to 12.8% of women.
  • Income Level

  • When broken down to the annual household income of Americans, the Gallup report also showed that with an increase in households’ incomes, insurance coverage rates also went up. Households with low annual incomes had the highest uninsured rate in 2018.
    • Households with an annual income under $24,000 had an uninsured rate of 25.4%.
    • Households with an annual income of $24,000 and less than $48,000 had an uninsured rate of 19.1%.
    • Households with an annual income of $48,000 and less than $90,000 had an uninsured rate of 9.1%.
    • Households with an annual income of $90,000 and less than $120,000 had an uninsured rate of 5.9%.
    • Households with an annual income of $120,000 or more had an uninsured rate of 3.6%.
  • The U.S. Census Bureau also concurred with the fact that houses with lower income had lower health insurance coverage rates when compared with households with higher income. According to their report, 86.2% of Americans in households with an annual income of less than $25,000 had health insurance coverage in comparison to 96.8% of people in households with an income of $150,000 or more.
  • Educational Level

  • When it comes to the education level of consumers, those with higher levels of educational attainment are more likely to have health insurance coverage.
  • According to the U.S. Census Bureau, 96.6% of Americans aged 26-64 with a graduate or professional degree had health insurance coverage, compared with 93.8% of the population with a bachelor’s degree, 85.1% of high school graduates, and 71% of the population with no high school diploma.”
  • Marital Status

  • The report by the U.S. Census Bureau also revealed that many adults get their health insurance coverage via their spouses and therefore, health insurance coverage is associated with marital status. According to the report, in 2018, married adults aged 19-64 were more likely to be insured compared to other marital groups at 91.7%.
  • Additionally, people who were divorced or separated were least likely to be insured according to the census bureau. “84% of people who were never married, 86.3% of people who were widowed, and 87% of people who were divorced were covered by health insurance.”

Current Technology Trends in the Insurance Industry

    Trend #1: Artificial Intelligence

  • According to Forbes, Artificial Intelligence (AI) is arguably going to cause a huge disruption in the insurance industry than in any other. However, Forbes further stated that the insurance industry is behind in the use of AI with only 1.33% of the industry having invested in AI in 2017. The article went further ahead to state that the industry’s slowness to adopt AI is what made insurtech startups successful.
  • A 2020 report by DXC Technology revealed that 43% of Americans are comfortable with insurance companies using AI and chatbots among other technologies to help with insurance applications and claims.
  • By incorporating AI in their operations, insurance companies in the US would be able to prevent cases such as money-laundering, fraud, and underwriting among others. Additionally, AI will also give the companies an opportunity to achieve automation and enhance personalization.
  • Carpe Data is an example of an American company that is already providing insurance businesses with algorithms and proven AI to help them gain a deeper understanding of risks as well as enhance several areas of the insurance life cycle like underwriting and claims.
  • Allstate, Liberty Mutual, Progressive, and State Firm are examples of top insurance firms in the US already using AI in their operations.
  • We chose this trend after several credible sources such as Forbes and Board of Innovation concurred with each other on the current technology trends impacting the insurance industry.
  • Trend #2: Telematics