Beyond the Bayou and Mardi Gras
The United States Census Bureau’s Census 2000 estimated the population of the State of Louisiana at 4,468,976. Approximately 75 percent of the adult residents had graduated from high school and about 19 percent had earned a bachelor’s degree or higher. The capital, Baton Rouge, has a population of 227,818.
From an employment perspective, the primary industries in Louisiana are:
From a P/C insurance perspective, Louisiana accounted for $6,521,050,000 of direct written premium. Countrywide as
of Sept. 30, 2003 the aggregate is $313,781,216,000 of P/C insurance written.
Louisiana calendar year 2002 loss ratio of 78.1 percent was above the countrywide year to date Sept. 30, 2003 loss ratio of 62.3 percent.
Homeowners, personal auto liability and automobile physical damage comprise 51 percent of the direct written premium in the State of Louisiana. The Louisiana Insurance Rating Commission (LIRC) and the Louisiana Department of Insurance hold monthly meetings to approve rate and form filings. The new Flex Band Rating System, which went into effect Jan. 1, 2004, allows companies to modify rates plus-or-minus 10 percent without previous LIRC approval. The LIRC then has 30 days to determine whether the rates are justified actuarially. Insurers must notify policyholders at least 30 days in advance of a renewal with a rate increase.
The Louisiana economy is diversified. The employed civilian population comprises nearly 40 percent of Louisiana’s population. It is distributed as follows:
Given the anticipated growth in the number of jobs located in Louisiana and the diversification of the Louisiana economy, I would expect the growth rate of Louisiana’s P/C insurance marketplace, as measured by direct premium written, to approximate the growth rate experienced on a countrywide basis.
This article was written by Joseph L. Petrelli, president and founder of Demotech Inc., a Columbus, Ohio-based financial analysis and actuarial services firm. Petrelli is a member of the Casualty Actuarial Society, American Academy of Actuaries and the Conference of Actuaries in Public Practice. Additional information can be found at www.demotech.com.