Commerce and Isurance

BARRIERS TO ENTRY
High barriers to entry mean that new companies struggle to enter an industry, while low barriers mean it is easy for new companies to enter an industry.

CAPITAL INTENSITY
Compares the amount of money spent on capital (plant, machinery and equipment) with that spent on labor.
IBISWorld uses the ratio of depreciation to wages as a proxy for capital intensity. High capital intensity is more than $0.333 of capital to $1 of labor; medium is $0.125 to $0.333 of capital to $1 of labor; low is less than $0.125 of capital for every $1 of labor.

CONSTANT PRICES
The dollar figures in the Key Statistics table, including forecasts, are adjusted for inflation using the current year (i.e. year published) as the base year. This removes the impact of changes in the purchasing power of the dollar, leaving only the "real" growth or decline in industry metrics. The inflation adjustments in IBISWorld’s reports are made using the US Bureau of Economic Analysis’ implicit GDP price deflator.

DOMESTIC DEMAND
Spending on industry goods and services within the United States, regardless of their country of origin. It is derived by adding imports to industry revenue, and then subtracting exports.

ASSETS UNDER MANAGEMENT (AUM)
The assets, such as equities, fixed income, real estate and alternative assets, managed on behalf of clients.

HARDENING PRICE CYCLE
A period of time when insurance providers raise premium prices to improve profit and increase capital reserves.

UNDERWRITING
The process where insurers assess the risks to insure and decide how much to charge for those risks.

Early during the period, disposable income and consumer spending levels increased every year between 2017 and 2019. While a wide range of operators in the sector benefited from improving macroeconomic conditions until 2019, this trend reserved in 2020 as a result of the COVID-19 (coronavirus) pandemic. Lower economic activity has led to lower demand for borrowings provided by sector operators. However, the sector has benefited from steady demand for insurance products and rapid demand for security brokering services, as business seek to sure up their financial security amid the coronavirus pandemic. Over the five years to 2022, sector revenue is expected to increase an annualized 2.5% to $5.7 trillion, including growth of 0.1% in 2022 due to rising interest rates and increased demand for operators' services as the economy settles back to normal. Furthermore, despite interest rates increasing in the latter part of the current period, sector profitability is expected to decrease over the five years to 2022.