Industry Insights Vol IV, Issue 3

The Great Recognition: How Insurance Became The Most Resilient Industry In The World

As the global economy finds itself immersed in another stretch of uncertain times – will the insurance industry once again prove its resiliency against this latest stress test? 

The insurance industry has often been the subject of lighthearted jokes and dismissive remarks. From its reputation for mountains of paperwork and confusing jargon to frustrating claims processes, it is an industry that is portrayed as dull, bureaucratic, and perhaps even predatory. Yet behind this unglamorous image lies one of the most quietly powerful, indispensable and resilient industries in the global economy – supporting nearly every facet of modern life. At a minimum, insurance is a critical lubrication for the world economy. At its best, insurance might be the greatest industry in the history of mankind.

A large industry without the respect 

With a market value estimated to be approximately $8 trillion (based on gross written premiums)¹, the insurance industry is positioned as one of the very largest industries globally, comparable to or even exceeding the automotive and core energy sectors. Insurance also represents a significant component of the broader financial services market, which contributed approximately 21% to the U.S. gross domestic product (GDP) in 2024.² Yet, despite this global representation the insurance industry is frequently dismissed. 

Part of the reason is because insurance deals with risk and uncertainty. Its product is “a promise” or “peace of mind” – something that is intangible. For most, insurance is a necessary evil, whose value is often invisible until it’s needed. 

The concept of insurance has roots that go back thousands of years, across all cultures, and has endured and adapted to technological and societal changes. As the world made advances in technology it was suggested that the need for insurance, or at least insurance brokers, might become diminished. 

In the early 1990s a state insurance commissioner was quoted by the Wall Street Journal calling insurance agents “the buggy-whip makers of the 20th century” – suggesting that technology would make them obsolete.³ 

Thirty years later, the opposite has happened. Technology has accelerated the value, profitability and importance of insurance (and insurance brokers), due not only to improved risk assessment and management, but also to the introduction of new risks – such as cyber threats, climate change, and global supply chain vulnerabilities. Rather than rendering this industry obsolete, technology has made the need for insurance even more critical for individuals and businesses to operate – and even thrive. 

The resiliency of the insurance industry 

The past quarter-century has tested the global economy with a series of unprecedented shocks: from the dotcom market crash of the early 2000s and the devastating 9/11 tragedy in 2001, to the profound financial markets collapse of 2008, to the global disruption of the COVID-19 pandemic in 2020. 

Through each of these global disruptions, the insurance industry has demonstrated remarkable resilience, proving its foundational role as a shock absorber for society. Not only have insurers survived these events, but they have adapted and, in many cases, emerged stronger. This resilience is rooted in the industry’s foundational principles of risk management, diversification, and long-term capital stewardship. 

The dotcom crash and 9/11 (2000-2002) 

The bursting of the dotcom bubble in early 2000 led to massive losses in the equity markets, with the Nasdaq falling nearly 77% from its peak (from 3/10/00 to 10/4/02).⁴ Thousands of tech startups declared bankruptcy, leading to widespread layoffs and hiring freezes. While insurers with significant investment exposure to tech stocks experienced short-term losses, the industry as a whole remained stable. Diversified investment strategies and the long-term nature of liabilities within the industry generally cushioned the blow. This period also highlighted the inherent stability derived from the core business of underwriting risk, rather than speculative trading. 

In the middle of the dotcom crash, the 9/11 terrorist attacks threatened to push an already fragile economy over the brink. It became a critical turning point for the insurance industry, solidifying it as the cornerstone for economic stability. 

9/11 resulted in an estimated $32.5 billion in insured losses (over $58 billion in 2025 inflation adjusted dollars) across multiple lines of business – becoming the largest single loss event in global insurance history.⁵ While the insurance industry demonstrated its ability to absorb massive losses and adapt in the face of a catastrophic event, 9/11 also accelerated modernization, improved risk governance, and reinforced the industry’s role as an economic safety net. 

The global financial crisis (2008-2009) 

Just a few years later the 2008 global financial crisis hit, sparked by the housing bubble, bank-issued subprime mortgages and mortgage-backed securities. Dubbed “The Great Recession” – it lasted 18 months (December 2007 to June 2009), making it the longest and most severe economic downturn since the Great Depression. Millions of Americans lost their homes as home values plummeted, wiping out trillions in household wealth, while stock markets crashed. At its bottom, on 3/9/09, the three major equity indices – The Dow Jones Industrial Average, The S&P 500 and the Nasdaq Composite – were down 54%, 57% and 56% respectively from their previous highs. 

For the insurance industry, this presented a different challenge. While some insurers faced severe distress – particularly those with exposure to mortgage-backed securities – the broader insurance industry largely weathered the storm better than many banking institutions. This was due in part to robust state-level regulations, which traditionally mandated more conservative investment portfolios for insurers compared to banks. While capital levels declined and net income dropped for many, the industry as a whole demonstrated an ability to recover relatively quickly, reinforcing the strength of its underlying business model. 

COVID-19 Pandemic (2020–2022) 

The global disruption caused by the COVID-19 pandemic in 2020 again showcased the insurance industry’s resiliency. In the beginning, even the industry itself was unsure of how the global shelter-in-place mandates and subsequent economic impact would affect it. Early estimates on losses from business interruption claims and event cancellation insurance due to the lockdown were in excess of $100 billion (which would have made it the largest catastrophe in history). In the end, the pandemic resulted in an estimated $44 billion in insured losses, the third largest behind Hurricane Katrina and 9/11.⁶ 

One of the biggest impacts the pandemic had on the insurance industry was the acceleration of a digital transformation for the industry, including the growth and rapid adoption of insurtech. 2021 saw the largest investment into the insurtech space with over $15 billion invested.⁷ As the pandemic forced remote work arrangements for insurance employees, compounded by the rapid increase in claims and customer services needs due to the pandemic – the industry quickly adapted. There was an increased need for digital platforms and automation, operational efficiencies, and better customer interactions. In the end, the insurance industry came out of the COVID period even stronger. 

The next stress test? 

Could today’s current environment – marked by a prolonged inflationary period, geopolitical unrest, and President Trump’s renewed tariffs campaign and reconciliation bill – the One Big, Beautiful Bill Act (OBBBA) – be the insurance industry’s next stress test? 

If so, the industry should once again prove its resiliency and continue to be a safety net for individuals, businesses and investors alike. 

The resiliency of insurance brokers during global disruptions and down economies is best illustrated in the historic performance of the largest publicly traded insurance brokers over the past 25 years. The MarshBerry Broker Composite Index is a composite of market data (sourced from Yahoo Finance and prepared for analytical purposes only) on six publicly traded brokers: Arthur J. Gallagher & Co. (AJG), Aon plc. (AON), Brown & Brown, Inc. (BRO), Marsh & McLennan Companies, Inc. (MMC), Willis Towers Watson Public Limited Company (WTW) and The Baldwin Group (BWIN).⁸ 

Over the past 25 years, across global economic stress tests, the Broker Index has significantly outperformed the three major equity indices. Since January 1, 2000, the S&P 500, the Dow Jones Industrial Average, and the Nasdaq Composite delivered returns of 326%, 288% and 393% respectively. Meanwhile, the Broker Composite Index delivered an over 1300% return. 

While the insurance industry may not always garner public admiration, its quiet strength, immense scale, and profound stability are undeniable. It is an unsung pillar of the global economy, discreetly enabling progress, innovation, and peace of mind by transforming unpredictable risks into manageable certainties. To dismiss it is to overlook one of the most vital and ingenious financial inventions in human history. 

Hurricane Season: Perspectives For The Insurance Industry

As the 2025 Atlantic hurricane season intensifies, the insurance industry is once again bracing for impact. The current season follows on the heels of 2024’s Hurricane Beryl, which made history as the earliest Category 5 storm on record and caused an estimated $30 billion in total losses and up to $4.5 billion for U.S. private market insured losses.⁹ 

Now that the National Oceanic and Atmospheric Administration (NOAA) has forecasted another above-average season for 2025, insurers, reinsurers, and consumers are facing a potentially volatile and uncertain year. 

The 2025 forecast 

NOAA has warned there’s a 60% chance that 2025 will be an above-normal hurricane season. This expectation is due to a number of factors, including warmer than average oceanic temperatures, forecasts for weak wind shear (which allows storms to grow vertically without being disrupted), and the potential for higher activity from the West African Monsoon, a primary starting point for Atlantic hurricanes. All of these elements tend to favor tropical storm formation. 

The agency forecasts a range of 13-19 named storms (39 mph or higher winds). Of those, 6-10 are predicted to become hurricanes (winds of 74 mph or higher), with 3-5 major hurricanes (category 3, 4 or 5; with winds of 111 mph or higher).¹⁰ 

Florida: A case study in fragility and reform 

Florida continues to be the epicenter of insurance distress. Though recent reforms have slowed the exodus of insurers, the state remains deeply vulnerable. Citizens Property Insurance, the state-run insurer of last resort, had grown to become the state’s largest insurer in recent years. After reaching as many as 1.4 million policies in 2023, Citizens has used what is known as a “depopulation” program to shift policies to private insurers.¹¹ To assist in stemming the tide, Governor Ron DeSantis has doubled down on reforms. House Bill 1503, signed last year, paved the way for surplus lines carriers to assume Citizens’ policies.¹² This, in tandem with House Bill 837, which curbed excessive litigation, may be helping. Florida’s private insurance market showed a modest underwriting profit in Q1 2025—after seven years in the red.¹³ 

Texas: a new flashpoint 

In 2025, Texas finds itself increasingly resembling Florida in its climate exposure and insurance vulnerability. Following the devastating 2024 floods, new reports show that fewer than 5% of homeowners in hard-hit counties carried flood insurance.¹⁴ Overall, the vast majority of Texas flood damages—estimated at over $22 billion—were uninsured, highlighting a severe protection gap.¹⁵ 

The National Flood Insurance Program (NFIP), run by FEMA, is supposed to close this gap, but enrollment remains low, premiums are rising and the entire program is at risk (see MarshBerry’s “A Flood of Changes”). Compounding the issue, many homeowners mistakenly believe their standard policies include flood coverage. Since 1996, 99% of U.S. counties have experienced flooding, yet only ~6% of American homes are insured against it.¹⁶ 

The reinsurance market: Holding steady for now 

Despite current forecasts, most reinsurers are entering 2025 with confidence. According to Acrisure Re, the reinsurance market is “well equipped” to manage another slightly above-average hurricane season in 2025, even following the Los Angeles wildfires and severe convective storm activity. “Thanks to several years of market hardening and improved terms and conditions, the reinsurance industry is now in a much stronger position to absorb the impact of events like Helene and Milton.” an Acrisure spokesperson said.¹⁷ Following Hurricane Beryl, the Texas Windstorm Insurance Association reported that reinsurance rates rose between 20-40%.¹⁸ Another major event this year would virtually guarantee further increases in 2026. 

The possibility of a political “storm:” NOAA’s satellite data cutoff 

The tools used to predict storms are facing their own storm of uncertainty. In a move that has sparked widespread concern among meteorologists and disaster planners, the U.S. Department of Defense has informed NOAA that it will cut off access to key satellite data from the Defense Meteorological Satellite Program (DMSP) as of July 31, 2025.¹⁹ This data—specifically, microwave imagery—is essential for tracking storm centers, detecting rapid intensification, and monitoring hurricanes at night or through thick cloud cover. Experts warn the loss will reduce forecasting precision at a time when climate-driven storm behavior is becoming more erratic and severe. 

While NOAA has assured the public that alternative data sources will fill the gap, many within the forecasting community remain unconvinced. Former NOAA officials, along with independent meteorologists, have cautioned that the move could lead to larger errors in storm track and intensity predictions, potentially reducing lead time for evacuations or emergency declarations. 

Carriers, climate, and the future of risk 

Insurance professionals are watching closely, especially as private carriers increasingly rely on sophisticated catastrophe models that ingest real-time atmospheric data. If federal infrastructure weakens, insurers may need to assume a greater role in risk surveillance and weather forecasting. Insurers are already reassessing how they model risk. Some are even investing directly in new climate and geospatial technologies, leading to the possibility that the industry may take a more active role in climate modeling and forecasting—becoming, in effect, its own NOAA. 

The Personal Insurance Affordability Crisis

The commercial insurance market has been showing signs of a “softening” rate environment, particularly in Q1 and Q2 2025, indicating a potential shift from the hard market conditions of recent years. However, the personal insurance market is still very much in a hard rate environment, which consumers have been experiencing for nearly 10 years – but may no longer be able to tolerate. 

As inflation, severe weather, and other macroeconomic factors continue to drive up costs for labor and materials, multiple personal insurance product lines are becoming increasingly unaffordable for customers. 

Auto, homeowners, and health insurance are feeling the greatest impact. In the past year, homeowners’ insurance rates rose 11.4%,²⁰ average rates for car insurance policies have increased nearly 12%,²¹ and health insurance rates increased about 7%.²² While these numbers may not seem extraordinary, remember that they are average national numbers, with some areas or states facing staggering increases well above average. For example, Nevada car insurance rates went up 27.9% in 2024²³ and there are no signs of personal rates decreasing any time soon. While the root cause of the affordability crisis is cost, multiple issues are creating that cost barrier, across sectors. 

Causes of the affordability crisis 

Some of the key drivers of the increased rates include more destructive natural disasters, substantial legal judgments, and supply chain disruptions. Also impacting prices are some recent actions taken by insurers, such as implementing double-digit rate hikes or exiting markets altogether, which reduces competition and drives prices higher. As shown in the table below, annual personal lines rates have increased consistently for almost ten years, with a large jump starting in 2023. 

All of this leads to a rise in consumers starting to cut insurance coverage out of their budget. In 2017, 12.4% of motorists were uninsured, but that number rose to 15.4% by 2023, according to a 2025 study.²⁴ In addition, insurance carriers are denying coverage more frequently, particularly in the homeowners’ sector. The number of homeowners without insurance jumped from 5% in 2019 to 12% in 2024.²⁵ 

At the same time, the average household is struggling to afford basic necessities, has minimal savings, and high credit card debt. While, on average, household income has outpaced inflation, more detailed research paints a different picture. For example, housing costs in major Florida cities doubled compared to the national rate while Texas cities saw grocery prices skyrocket compared to other cities. Since 2020, wages have not kept up with the cost of living for almost every major U.S. city.²⁶ When consumers need to cut costs, insurance is often the first to go. 

Solutions for brokers: educate, inform, personalize 

Many consumers are either misled or uninformed regarding why insurance is necessary and how to get reduced costs or discounts. Some are even unaware of what their policies actually cover or haven’t identified that their coverage is incomplete or unsuitable. Consider the July flooding tragedy in Texas – in the hardest-hit counties, only 2%-5% of homeowners carried federal flood insurance.²⁷ 

To combat this misinformation and confusion, insurance brokers should: 

• Lay out the risks. Clients should know the full risks of cutting insurance coverage, including the potential for significant financial losses if disaster occurs, higher future premiums, even legal and financial penalties. 
  
• Market the “shop around” process. Clients and prospects may assume all insurance quotes are set in stone and don’t always understand that brokers negotiate prices to uncover a wide range of options. Promoting your ability to get discounts or specialized coverage not only retains current clients but can also attract prospects who believe insurance is out of their financial reach. 

• Ensure clarity or address knowledge gaps. Generation Z has been identified as one population who thinks insurance is unnecessary but may lack the education related to specific purposes of each type and policy. One common mistake is “coverage confusion.” For example, believing a landlord’s insurance covers residents, when in actuality, renter’s insurance is necessary to protect their personal property. 
  
• Investigate coverage denials. Was there a miscommunication or inaccurate information provided by the insured? Have they recently made improvements to their home or lifestyle that may persuade the insurance company to reconsider? For example, if clients are rejected for homeowners’ insurance look into upgrades, such as a new roof, to obtain discounts or lower premiums. 
  
• Customize coverage. Addressing clients’ individual concerns with customized products can help them find more affordable solutions. For example, pay-as-you-drive insurance may be an option for someone who has access to public transportation. Others are exploring on-demand insurance, such as Zurich’s Gig Insurance, which is often short-term and more flexible, but still offers strong protection in case of injury or accident. 

Above all, communicate with clients and prospects to understand their challenges and broad financial picture. This is where insurance brokers shine, as they can be a trusted advisor to households who are struggling or may be vulnerable and not even know it. 

In summary, the cost of insurance alone is not the only cause of the affordability crisis; economic, educational, and personal factors are also contributing to the problem. Insurance brokers will have to focus on communication and guidance to demonstrate that there are other ways to save money without cutting essential protection. 

Until the personal insurance market softens, where rates will look better for customers – brokers must continue to be advocates for their clients, so they are protected if the worst-case scenario happens. 

Three “Hidden-Gem” Metrics Of Firm Productivity

While EBITDA (earnings before interest, taxes, depreciation and amortization) is a prominent and important metric for calculating the valuation of an insurance brokerage, it is a measurement of results—not a measurement of how those results were achieved. When buyers “lift the hood” on EBITDA, they start scrutinizing productivity. MarshBerry has identified 16 vital productivity metrics known as Critical Performance Indicators (CPIs). Some CPIs, like sales velocity, which measures new business rate (total new business commissions this year divided by total commissions and fees income last year, minus fee income last year), receive a lot of attention. But others often go underappreciated. 

There are less well-known CPIs that might be just as valuable for improving a firm’s productivity and growth, and ultimately, value. Here are three “hidden gem” metrics and some insights into why they matter and how they interact with each other. 

1. Revenue per employee (Net revenue divided by total personnel) 

Based on MarshBerry’s proprietary financial management system Perspectives for High Performance (PHP), the top 25% performing firms are achieving $263,000 in revenue per employee. 

This CPI matters because it gives a snapshot of operational efficiency, reflecting both sales effectiveness and backend productivity—two drivers of EBITDA. It also serves as a proxy for how hard each person is working (and how much value they’re delivering) regardless of their role. Higher is better, but with a caveat: this metric must be viewed in the context of other measurements, including employee job-satisfaction surveys and turnover rates. While low satisfaction and high turnover can be attributed to any number of factors, the presence of those issues in conjunction with high revenue per employee can raise a red flag as far as sustainability and proper approach to generating that revenue. 

In addition, outsourcing certain functions (which reduces the “per employee aspect”) or having a top-heavy team, where certain veteran superstars deliver outsized contributions can also make this ratio slightly misleading. That’s why “revenue per employee” must always be viewed in the context of other factors. 

2. Employee marginal profitability (Revenue per employee minus total payroll per employee) 

Based on MarshBerry’s PHP database, the top 25% performing firms are achieving employee marginal profitability of $125,500. 

This CPI helps answer a crucial question: How much additional profit does the average employee generate for each additional dollar of compensation? In other words, this ratio assesses the return on human capital.

It matters because insurance is a people-driven business, and the marginal profitability of each employee reflects how efficiently labor is turned into earnings. Higher is better with this ratio, and buyers look at the ratio as a measure of management effectiveness as well as scalability. Is the current team maximizing efficiencies or is there “bloat”? And if the firm grows, can profitability also be expected to increase given the current approach?

3. Total commissions and fees per service person (Total commissions and fees divided by total service personnel) 

Based on MarshBerry’s PHP database, the top 25% performing firms are achieving $430,400 in total commissions and fees per service person. 

This CPI measures the book of business each service person is supporting. This matters because it directly reflects workload and operational capacity at the client-service level. Firms with a high ratio typically have better automated systems, stronger client retention, and more experienced service staff. Beyond basic efficiencies, buyers can see this ratio as an indicator of client satisfaction and backend scalability. If the ratio is too low, it could reflect a “bloated” staff, underproduction, the recent loss of business, or high client turnover on an ongoing basis, among other factors. Once again, with this ratio, higher is better, but as with revenue per employee, a high ratio could indicate inadequate staffing, so contextualization remains critical. 

How these ratios work together 

Individually, these metrics are insightful. Together, they form a triangulated view of profitability and sustainability: 

• Revenue per employee offers a big-picture view of productivity. 
  
• Total commissions and fees per service person zooms in on backend efficiencies and productivity within service operations. 
  
• Employee marginal profitability ties it all to the bottom line, with productivity measured by profitability on an individual basis, providing valuable insight into current valuation and prospects for growth. 

For insurance brokerage leaders, tracking and optimizing these metrics allows for smarter growth strategies, better talent decisions, and stronger valuations when it’s time to sell or scale. For buyers, these “hidden gem” ratios offer a clearer look at the pistons that power the EBITDA engine. 

Sources:

1. https://www.statista.com/topics/6529/global-insurance-industry
2. https://www.statista.com/statistics/248004/percentage-added-to-the-us-gdp-by-industry/ 
3. https://completemarkets.com/Article/article-post/2383/The-Revenge-Of-The-Buggy-Whip-Maker/ 
4. https://finbold.com/guide/dot-com-bubble-crash/ 
5. https://www.claimsjournal.com/news/national/2011/09/09/190969.htm
6. https://commercial.allianz.com/news-and-insights/expert-risk-articles/claims-report-22-covid19.html 
7. https://www.insurancebusinessmag.com/us/news/technology/global-insurtech-funding-for-2021-smashes-records-404420.aspx 
8. The MarshBerry Broker Index is a composite of market data on the following companies, sourced from Yahoo Finance: BWIN, BRO, AON, AJG, MMC, WTW. It is prepared for analytical purposes only. This information is not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any securities, financial instruments or to participate in any particular trading strategy. 
9. https://www.moodys.com/web/en/us/insights/announcements/moodys-rms-event-response-estimates-us-private-market-insured-losses-for-hurricane-beryl-will-likely-range-between-us25-billion-to-us45-billion.html 
10. https://www.noaa.gov/news-release/noaa-predicts-above-normal-2025-atlantic-hurricane-season 
11. https://www.gulfcoastnewsnow.com/article/citizens-property-insurance-florida-increase/63422172 
12. https://www.flsenate.gov/Session/Bill/2024/1503 
13. https://www.rstreet.org/commentary/florida-insurance-market-on-the-mend 
14. https://www.houstonchronicle.com/politics/texas/article/kerr-county-flood-insurance-20761656.php 
15. https://www.ainvest.com/news/texas-floods-highlight-98-homeowner-insurance-gap-2507/ 
16. https://www.theguardian.com/us-news/2024/oct/12/flood-insurance-hurricane-milton-helene 
17. https://www.tradingview.com/news/reuters.com%2C2025%3Anewsml_L6N3S20EK%3A0-reinsurers-well-equipped-for-slightly-above-average-2025-hurricane-season-acrisure-re 
18. https://www.insurancebusinessmag.com/reinsurance/news/breaking-news/hurricane-beryl-could-cost-twia-half-of-its-catastrophe-reserve-497324.aspx 
19. https://www.cbsnews.com/news/hurricane-forecasting-data-cut-july-noaa-says/
20. https://www.lendingtree.com/insurance/state-of-home-insurance/ 
21. https://www.bankrate.com/insurance/car/average-cost-of-car-insurance/ 
22. https://www.valuepenguin.com/average-cost-of-health-insurance
23. https://beinsure.com/us-auto-insurance-rates-states/ 
24. https://www.iii.org/fact-statistic/facts-statistics-uninsured-motorists 
25. https://www.usatoday.com/story/money/2024/06/23/americans-not-buying-homeowners-insurance/74144566007/ 
26. https://www.ksjbam.com/2025/03/13/inflation-vs-wages-where-salaries-havent-kept-pace-with-rising-costs/ 
27. https://www.bloomberg.com/news/articles/2025-07-09/few-texas-homeowners-hit-by-flash-flooding-have-flood-insurance