Category Archives: Insurers and the Economy

Careers and Employment, Insurers and the Economy

Making sense of the dip in property/casualty carrier employment

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By Dr. Steven Weisbart, Chief Economist, Insurance Information Institute

 

On a seasonally-adjusted basis, the number of people working for property/casualty (p/c) insurers has been dropping continually for two years (since February 2017), from 551,200 to 520,700 (the preliminary estimate for February 2019).

Seasonal adjustment plays a small part in determining these numbers. The not-seasonally-adjusted p/c carrier employment for February 2017 was 549,500, and the February 2019 preliminary estimate was 518,600.

What’s going on? Is this a trend? Based on the numbers alone, it’s hard to tell. Consider the following graph of seasonally-adjusted p/c carrier employment since January 2011 — 18 months after the official end of the Great Recession:

Source: Bureau of Labor Statistics

Don’t be misled by the spike in March 2015-March 2016. This is how the Bureau of Labor Statistics incorporates a change in classification—that is, in this case, some people who were previously not considered employed by p/c carriers were, as of March 2015, now considered as employed in this industry. Rather than an instant change, the adjustment is made over twelve months beginning and ending in March.

Since the data that begin in March 2016 also show a downtrend, it is easy to infer that, if there had been no reclassification in 2015-16, the downward trend that started (on the graph) in 2011 would in 2019 probably show p/c carrier employment at or below 500,000.

Although we don’t readily have policy counts over that span, it is reasonable to assume that, with growth in the population and the economy, p/c carriers are growing, and doing so with fewer employees. It is likely that at least some of this is due to the use of digital methods for activities that humans previously did. P/C carriers are becoming more productive.

Disaster Preparedness, Insurers and the Economy

Federal Reserve’s Randal K. Quarles and the I.I.I.’s Sean Kevelighan talk resilience – financial and otherwise

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By Lucian McMahon

“It’s a mistake to try and think of resilience from the point of view of trying to predict what can happen and then to respond to a predicted event, because you won’t know what’s going to happen,” said vice chairman for supervision and member of the Board of Governors, Federal Reserve System Randal K. Quarles at the Insurance Information Institute’s (I.I.I.) 2019 Joint Industry Forum. “The important thing is to ensure that you have measures in effect […] that promote resiliency no matter what might happen.”

Left to right: Sean Kevelighan and Randal Quarles

Resilience is more than prevention

In his conversation with the I.I.I. CEO Sean Kevelighan, Quarles stressed that financial stability depends on resilience, the ability to absorb system shocks no matter their source. “Wherever the shock might come from, it’s important that the institution or system is resilient to shock,” he said.

Cyberrisk is a perfect example. Quarles noted that a lot of the discussion around cyberrisks is about prevention. But he argued that prevention is only one part of cyberrisk resilience. “A key element to resilience is to assume that something will happen, and then determine how you have constructed a system that can stand back up, withstand, and respond to that shock.”

The U.S. economy appears to remain resilient during recent events

Quarles noted that the data on the real economy remains strong. Job creation continues. There’s been an uptick in the labor force participation. The economy is growing without unconstrained inflation.

But what about the recent stock market fluctuations and the ominous financial news coming out of Europe and Asia? “I think recently financial markets have been reacting to a few things,” Quarles said. “Mostly it’s doubt in the strength of continuing global growth. Some of the data that’s come out of China and Europe would suggest a little bit of less growth in the near term.”

Nonetheless, Quarles pointed out that markets might be more attuned to downside risks. He is confident that the core fundamentals of the economy remain strong. “The fundamental fact is that the financial sector is much more highly capitalized, has more liquidity, than it had before the crisis. Our assessment of risk to stability in the current environment is moderate.”

Quarles acknowledged that certain global events (particularly recent threats to trade openness) could impact the financial sector. The Fed, however, is alert to it. Quarles remains optimistic. “The hope is that a lot of these current events, current issues, will be way stations on the way to a more stable, more politically-supported open economy. It’s in everyone’s long term interest.”

In other words, the hope is that the economy is more resilient to shocks than it had been in the past.