The financial services industry consists of thousands of financial products and services to the public. Financial institutions include commercial banks, savings and loan institutions, credit unions, life and health insurers, property and casualty insurers, mutual funds, securities brokers and dealers, private and state pension funds, various government related financial institutions, finance companies, and other financial firms.
There are various ways of measuring the relative importance of private insurance in the financial services industry. One common method is to determine the percentage of industry assets held by each financial sector.
Assets in the financial service industry totaled $60.8 trillion. The banking sector held 27 percent of the total assets; the securities sector accounted for 21 percent of the assets; and the insurance industry held 11 percent of the assets; and the insurance industry held 11 percent of the total assets. However, this figure is somewhat misleading and understates the relative financial importance of the insurance industry because private insurers also control a large amount of private pension assets.
The financial services industry is changing rapidly. Two trends clearly stand out- consolidation and convergence of financial products and services. Consolidation means that the number of firms in time because of mergers and acquisitions. Because of competitive reasons, the number of commercial banks, securities dealers and brokerage firms, life and health insurers, and property and casualty insurers has declined significantly over time.
Convergence means that financial institutions can now sell a wide variety of financial products that earlier were outside their core business area. Because of the Financial products that earlier were outside their core business area. Because of the Financial Modernization Act of 1999, financial institutions, including insurers, can now complete in other financial markets that are outside their core business area.
For example, many life insurers sell substantial amounts of life insurance and annuties through banks. Some insurers have established banks and savings instructions chattered by the Office of Thrift Supervision (OTS). Other insures have established have established financial holding companies that allow them to engage in banking activities.
Assets of Financial Services Sectors;
- Insurance – $6,580.2
- Banking – $16,492.2
- Securities – $13,007.6
- Pensions – $10,458
- Government – $7,759.9
- Other – $6,501.6
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