They sell policies directly to consumers or through agents and brokers
The competitive landscape of the insurance industry has been shifting in recent years. Leading companies in this sector include AIG, Zurich, Berkshire Hathaway, Travelers, CNA and Chubb. The two major sectors of the property/casualty insurance business, Personal Lines and Commercial Lines, are dominated by different industry leaders.
Profits come to insurance companies primarily in two ways: underwriting profits, which are monies left over from premiums collected after operating expenses and claims are paid, and investment income, which is the income an insurer generates from investing its capital and the loss reserves maintained on its balance sheet to pay losses. Commercial insurance companies typically sell policies through agent or broker intermediaries. Many large commercial insurers write multiple lines and devote separate units to particular insurance products (e.g., property, casualty and specialty) and market segments (e.g., small, middle market, national and global accounts). Commercial lines companies specialize in specific lines of insurance for businesses, such as state-mandated workers' compensation insurance or "specialty" lines, which is a broad category of insurance that encompasses products like professional liability or environmental liability insurance. Others specialize in insuring lower value residences and the risks of middle-class homeowners.
An insurance company typically invests the premiums it collects so that its money grows, ensuring its financial ability to pay claims and fulfill its promise to insureds while maintaining a profitable business. These professionals also determine the proper amount of premium the insurer should charge to assume a risk, based on the size of the risk, the terms and conditions to be put forth in the insurance contract and the likelihood that a claim will occur. For example, certain personal lines players specialize in policies for high-net-worth individuals and focus on underwriting homes valued in excess of $2 million. Hence, specialization is common in the industry. An insurer can rarely, if ever, be all things to all people. The key elements that differentiate one insurer from another are specialization, underwriting expertise, financial strength, technology and service. Arch subsidiaries are now among the top thirty insurance companies in the commercial property/casualty segment. They insure commercial enterprises of all types, protecting everything from office buildings, hotels and manufacturing facilities, to warehouses, airlines and trucking companies. My company, Arch Capital Group Ltd., is one player that responded to this post-9/11 market need.
Several new players have entered the market, particularly to fill the market's need for replenishing capacity after the catastrophic insured losses from 9/11 forced many insurers out of business. Commercial lines insurers underwrite property, casualty (or liability) insurance for businesses. Dominant companies in this sector include State Farm Insurance, Allstate, Farmers Insurance, Nationwide, Progressive and GEICO. Personal lines insurance companies predominately write homeowners and auto liability insurance for individuals.
