Study: Insurance Industry Has a Significant Economic Impact in Michigan

A recently released study shows the positive contributions the insurance industry makes to Michigan’s economy statewide.

The report — Economic Footprint of Michigan’s Insurance Industry — was prepared by the Anderson Economic Group and shows the insurance sector provides an annual $37.1 billion in spending, 114,000 jobs, and $6.3 billion in earnings in Michigan.

Michigan is home to a number of large insurance providers and over 8,000 insurance agencies. Regulatory information on the number and scale of insurance firms was used in the analysis, as well as “direct knowledge about the operations of insurance carriers and revenues of insurance agencies,” the report states.

“In the most basic sense, insurance companies help Michigan residents and businesses manage their risk and prepare for retirement,” said Alex Rosaen, director of Anderson Economic Group and one of the report’s authors. “What is often less evident is the substantial impact the sector plays in Michigan’s overall economic development. To say it simply, the industry’s economic footprint in Michigan is significant and important.”

Highlights of the report include:

• The industry annually generates $37.1 billion in spending in the state, which includes direct and indirect economic output, jobs and earnings.
• It is estimated that the industry in 2014 spent $3.5 billion on employee compensation in Michigan. That amount includes $3 billion in salary and wages for the approximately 41,000 insurance carrier employees in the state and nearly $500 million in employee benefits.
• Average insurance industry individual compensation in Michigan is around $85,000. By comparison, the compensation total for the average worker statewide is just over $59,000.
• In addition to direct employment at insurance carriers, the industry indirectly supports nearly 73,000 additional jobs in Michigan.
• Around 58,000 insurance agents and brokers and more than 8,000 agencies are registered in the state. Insurance carriers paid more than $13 billion in agent and broker commissions in 2014, the report shows.
• Insurance carriers spent an estimated $3.3 billion at vendors in Michigan in 2014.
• The sector is employing a growing number of high-tech, IT jobs in Michigan with more than 7,000 IT professionals in the sector across the state.
• In 2014, the industry paid out nearly $50 billion in claims in the state.
• The insurance sector pays more than $500 million in state and local taxes. These taxes include income and property assessments, as well as a special tax on all premiums written in Michigan. In addition, some companies reported paying another $13 million in other state taxes.
• The insurance industry invests more than $1 billion in Michigan companies, local government bonds, and real estate. These investments help pay for critical infrastructure and development across the state.
• The industry contributed more than $44 million to Michigan charitable organizations in 2014. Employees volunteered more than 63,000 hours at company-sponsored charity activities.

The report’s authors suggest that the study shows the need to attract and develop fresh talent to ensure continued growth in the future.

Note: The Economic Footprint of Michigan’s Insurance Industry was commissioned by the Michigan Chamber of Commerce, the Lansing Regional Chamber of Commerce, the Lansing Economic Area Partnership, the Michigan Economic Development Corporation, the Life Insurance Association of Michigan, the Insurance Institute of Michigan, the Michigan Insurance Coalition, the Michigan Association of Insurance Agents, and the National Association of Insurance and Financial Advisors – Michigan.

The full report is available online at andersoneconomicgroup.com.

Topics Agencies Michigan Market