Show Me State’s Economy Shows Stagnant Growth

The U.S. Census Bureau’s 2000 census estimated Missouri’s population at 5.6 million. About 81 percent of the adult residents had graduated from high school and about 22 percent had earned a bachelor’s degree or higher. The capital city, Jefferson City, has a population of 39,636.

From an employment perspective, the primary industries in Missouri are:

From a property/casualty insurance perspective, Missouri accounted for $7.6 billion of direct written premium. Countrywide as of Sept. 30, 2003, the aggregate is $313.8 billion of P/C insurance. The Missouri calendar-year 2002 loss ratio of 71.5 percent was above the countrywide year-to-date Sept. 30, 2003 loss ratio of 62.3 percent.

It was interesting to note that Missouri’s homeowners loss ratio for calendar-year 2002 was 80.1 percent compared to the countrywide average at Sept. 30, 2003 of 61.8 percent. Homeowners insurance premium comprised 10.8 percent of the P/C premium written in Missouri. Homeowners premium comprised 10.7 percent of the premium written countrywide.

What surprised me the most was that Missouri farmowners insurance premium for calendar-year 2002 was $79.2 million. I expected it to be less. However, in a state with 17,240 farming, fishing and forestry employees, perhaps that is about right.

The Show Me State’s economy is somewhat stagnant. The employed civilian population comprises nearly 48 percent of Missouri’s population. It is distributed as follows:

Given the anticipated growth in the number of jobs located in Missouri and the diversification of the Missouri economy, I would expect the growth rate of Missouri’s P/C insurance marketplace, as measured by direct premium written, to approximate the growth rate experienced on a countrywide basis.

Joseph L. Petrelli is 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.