A return to growth will be bolstered by rising employment levels and overseas expansion
Los Angeles, CA (PRWEB) May 02, 2012
The Accidental Death and Dismemberment (AD&D) Insurance industry provides added peace of mind and financial security to insured persons looking to protect policy beneficiaries from financial losses that may result if the policy holder accidentally dies or suffers dismemberment. These policies are primarily sold by the life insurance industry (IBISWorld report 52411a) as supplementary coverage packaged with traditional life insurance policies.
Over the five years to 2012, IBISWorld estimates that revenue from AD&D insurance declined at a 2.8% average annual rate, including a projected decline of 0.7% in 2012 to total $24.9 billion. The Great Recession decimated consumer disposable income, which caused industry revenue to fall 7.8% in 2009 and a further 5.7% in 2010. According to IBISWorld industry analyst Doug Kelly, struggling companies were forced slash employee benefits, including their offerings of AD&D insurance, while individuals discontinued their existing policies to reduce costs.
Long-term demographic and secular trends, such as a shift toward services occupations and declining mortality rates, birth rates and household formation have also reduced consumer demand for survivor benefits provided by AD&D insurance. Americans are increasingly less likely to suffer from accidental death and dismemberment in the workplace or have financial dependents. These trends are projected to continue through the outlook period, further reducing consumer demand for AD&D insurance.
Over the next five years, IBISWorld projects industry revenue will return to marginal growth. This will be due to rebounds in employment and rising consumer disposable income that will increase the likelihood consumers choose to purchase life insurance and added AD&D coverage. In response, life insurers that provide AD&D insurance are projected to consolidate and expand into overseas markets to attempt to grow revenues and maintain profitability over the outlook period. “The US AD&D Insurance industry has low market share concentration, as the top four AD&D insurers in the United States account for less than 30.0% of industry revenue in 2012,” said Kelly. Over the five years to 2017, concentration is expected to increase as larger firms acquire smaller operators in an attempt to increase market share and expand services.
The four main types of insurers in the United States include stock-owned entities, mutual companies, fraternal organizations and federal agencies. However, most insurers are organized as either stock or mutual companies. Stock insurers issue stock and are owned by their stockholders, while mutual companies are legally owned by their policyholders and consequently do not issue stock. Stock insurance companies can be owned by a variety of investors, including individual investors, institutions, corporations, other insurance companies and even mutual firms. As a result, these entities tend to be less risk-averse in comparison to mutual companies, as the diverse ownership base is generally more concerned with profit margins and stock appreciation than financial stability. For more information, visit IBISWorld’s AD&D Insurance in the US industry report page.
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IBISWorld industry Report Key Topics
This industry underwrites (i.e. assuming the risk and assigning premiums) accidental death and dismemberment insurance policies. AD&D policies pay out money to a beneficiary upon the accidental death of the policyholder. AD&D policies also pay out to the policyholder directly in the case of accidents that cause a loss of limb or sight.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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