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Insurance Initiative

The Chicago Fed Insurance Initiative provides expert analysis of policy issues related to the insurance industry for the Federal Reserve System. The Insurance Initiative was established in 2011 and is motivated by the importance of the insurance industry in the overall economy as well as by the key role the industry plays for households and financial markets.

The Economy

  • The insurance industry accounts for approximately 7.6% of annual GDP.
  • The industry employs 2.6 million individuals in the U.S.

Households

  • 60% of U.S. households in 2013 had some form of life insurance.
  • Life insurers paid out $425 billion in life insurance and annuity benefits in 2016.
  • Property and casualty insurers paid out $378 billion in claims in 2016, including $23 billion to cover losses from catastrophes.

Financial Sector

  • Insurance companies are a critical source of funding for corporations, as well as for city and state governments: Insurance companies hold 25% of all corporate and foreign bonds and 13% of all municipal debt.

The Insurance Initiative produces regular reports on industry developments that are shared within the Federal Reserve System. In addition, Initiative staff author research and policy papers that are shared publicly

The Initiative examines insurance regulatory filings together with other financial data to conduct much of its analysis. In addition, Initiative staff gain insights through regular discussions with representatives of several insurance firms, who together represent 32 percent of life insurance assets and 10 percent of property and casualty assets. These firms are a mix of mutual and publicly traded companies. Individuals from the Chicago Fed, the New York Fed, and the Board of Governors participate in these discussions. Talking to a broad range of industry and financial sector experts provides a variety of perspectives on the issues and risks facing the industry and ensures that the Initiative’s work takes into account multiple viewpoints.

Featured Publications

Homeowners’ Financial Protection Against Natural Disasters
Alejandro H. Drexler, Andrew Granato, and Richard J. Rosen
Chicago Fed Letter
2019, No. 409

Catastrophe Bonds: A Primer and Retrospective
Andy Polacek
Chicago Fed Letter
2018, No. 405

The Risks of Pricing New Insurance Products: The Case of Long-Term Care
Zain Mohey-Deen and Richard J. Rosen
Chicago Fed Letter
2018, No. 397

What Explains the Decline in Life Insurance Ownership?
Daniel Hartley, Anna Paulson and Katerina Powers
Economic Perspectives
2017, Vol. 41, No. 8

How Much Risk Do Variable Annuity Guarantees Pose to Life Insurers?
Alejandro H. Drexler , Thanases Plestis , Richard J. Rosen
Chicago Fed Letter
2017, No. 384

Rules and Discretion in Life Insurance Regulation
Alejandro H. Drexler Zain Mohey-Deen and Richard J. Rosen
Chicago Fed Letter
2017, No. 373

View All

 

Contact Us
Insurance Initiative Team
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Federal Reserve Bank of Chicago, 230 South LaSalle Street, Chicago, Illinois 60604-1413, USA. Tel. (312) 322-5322

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