More than Dairy Farms and Cotton Plantations
The United States Census Bureau’s Census 2000 estimated the population of the State of Arkansas at 2,673,400. Approximately 75 percent of the adult residents had graduated from high school and about 17 percent had earned a bachelor’s degree. The capital city, Little Rock has a population of 183,133.
From an employment perspective, the primary industries in Arkansas are:
From a property and casualty insurance perspective, Arkansas accounted for $3,247,317,000 of direct written premium. Countrywide as of Sept. 30, 2003 the aggregate is $313,781,216,000 of P/C insurance written. Arkansas calendar year 2002 loss ratio of 69.5 percent was modestly above the countrywide year to date Sept. 30, 2003 loss ratio of 62.3 percent. It was interesting to note that Arkansas’s medical malpractice loss ratio for calendar year 2002 was 187.6 percent compared to the countrywide average at Sept. 30, 2003 of 73.6 percent. Homeowners’ insurance premium comprised 14.7 percent of the P/C premium written in Arkansas. Homeowners’ premium comprised 10.7 percent of the premium written countrywide.
What surprised me the most was that Arkansas farmowners insurance premium for calendar year 2002 was $12,501,000. I expected it to be more. However, in a state with 17,923 farming, fishing and forestry employees, perhaps that is about right.
The Arkansas economy needs to be diversified. The employed civilian population comprises less than 44 percent of Arkansas’s population. It is distributed as follows:
Given the anticipated growth in the number of jobs located in Arkansas and the diversification of the Arkansas economy, I would expect the growth rate of the state’s P/C insurance marketplace, as
measured by direct premium written, to lag the growth rate experienced on a country-wide 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. Additional information can be found at www.demotech.com.