Direct Premiums Written (DPW) refers to the total amount of insurance premiums that an insurance company has received from policyholders during a specific period, typically a year, before any adjustments for reinsurance or ceded reinsurance.
With the national total reaching nearly $950 billion in 2023, California leads by a significant margin, with over $111 billion in premiums, followed by Texas and Florida, each exceeding $80 billion.
The top five states, which also include New York and Illinois, account for a substantial portion of the national total, highlighting the concentration of insurance activity in populous and high-risk areas.
There’s a stark contrast between these top states and those at the bottom of the list, such as Vermont, Wyoming, and Alaska, where premiums are under $2 billion each.
This disparity reflects differences in population size, property values, and exposure to natural disasters, underlining the complex factors that influence home insurance markets across the country.
The map below shows “Direct Premiums Written / Population in the state,” which means the total premiums are divided by the state’s population. The key here is understanding that little phrase “per capita.” It’s not just about how much insurance costs in each state – it’s about how those costs spread across the population. And when you’re dealing with states as diverse as Rhode Island and Texas, population makes a huge difference.
Key Observations
1. Population impact:
- States with smaller populations may appear to have higher per capita premiums, even if their total premiums are relatively low.
- Conversely, states with large populations might show lower per capita figures, despite potentially having much higher total premium amounts.
2. Reassessing high-premium states:
- North Dakota’s high figure ($4,881) could be partly due to its small population rather than solely indicating higher insurance costs.
- Florida’s high number ($3,895) is more significant given its large population, suggesting genuinely high insurance costs.
3. Large states vs. small states:
- California ($2,855) and Texas ($3,027) have similar per capita figures, but Texas’s total premiums are likely much lower due to its smaller population.
- Rhode Island ($3,182) and Connecticut ($3,064) show high per capita rates, but their total premiums are likely much lower than larger states due to smaller populations.
4. Misleading comparisons:
- Direct comparisons between states like Wyoming ($3,361) and New York ($3,161) can be misleading without considering the vast population difference.
5. Underrepresented total costs:
- Large population states like Illinois ($2,378) or Pennsylvania ($2,649) likely have much higher total insurance costs than their per capita figures suggest.
6. Sparsely populated states:
- Alaska ($2,720) and Montana ($2,318) figures might overrepresent the insurance burden compared to more populated states.