December Insurance Payrolls Tumble by 6,100

A.M. Best

W. John Williams

January 12, 2004

OLDWICK, N.J., Jan 12, 2004, (A. M. Best via COMTEX) -- Losing jobs for the third straight month, insurance industry employment in December fell by 6,100, to a level of 2.223 million. The seasonally adjusted data were released by the Bureau of Labor Statistics on Jan. 9.

The previously reported loss of 1,800 insurance-related jobs in November was revised to a slightly deeper decline of 2,000. In the broader economy, total nonfarm payrolls rose by just 1,000 to 130.124 million in December, after November's original 57,000-jobs increase was revised to a weaker 43,000 gain. On a year-to-year basis, the annual rate of decline in December nonfarm payrolls eased to 0.1% from 0.2% in November, while the annual rate of insurance industry payroll change turned from a 0.4% gain in November to a 0.2% loss in December, the first decline in the industry's annual growth rate since January 2003.

Where total insurance industry payrolls are reported on a seasonally adjusted basis, along with the current month's nonfarm payrolls, data by industry segment are available only on an unadjusted basis for the prior month. That detail is based on monthly U.S. payroll tax filings made by insurance and insurance-related companies and is subject to an annual benchmark revision due with next month's statistical release.

The still-positive 0.4% overall annual growth in November's insurance employment broke out as a 0.3% loss among insurance carriers and a 1.5% gain among agencies, brokerages and related services. Among carriers, a 0.9% annual gain in the nonlife sector was offset by a 0.7% annual decline in the life/health sector. Volatile growth rates continued for both reinsurance and title insurance companies. Annual change in employment among reinsurers was down a near-record 13.0% from a year earlier, while annual growth among title insurers continued to slow, up 6.9%, after having peaked at 16.1% in August. Turning positive for the first time in two years, claims-adjusting employment rose 1.1% year-to-year in November, after a 2.1% decline in October.

"Given the timing lag between broad employment and insurance jobs, it would still be another quarter or so before you could expect annual industry jobs growth to turn up again," noted Yeol Cheol Seong, senior financial analyst in the structured finance group of A.M. Best Co. "Slowing growth among nonlife carriers has been dominated by large employment swings in the title insurance sector. Title insurers adapt quickly to changing conditions, and the recent backup in long-term interest rates has slowed the demand for mortgages."

Copyright (C) 2004 A.M. Best