Babe Ruth, Chesapeake Bay and Blue Crabs

The U.S. Census Bureau’s Census 2000 estimated the population of the State of Maryland at 5,296,486. Approximately 84% of the adult residents had graduated from high school and about 31% had earned a bachelor’s degree or higher. The capital city, Annapolis, has a population of 35,838.

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

From a P&C insurance perspective, Maryland accounted for $6,839,818,000 of direct written premium. Countrywide as of September 30, 2003 the aggregate is $313,781,216,000 of P&C insurance written. Maryland calendar year 2002 loss ratio of 76.8% was above the countrywide year to date September 30, 2003 loss ratio of 62.3%. It was interesting to note that Maryland’s Homeowners’ loss ratio for calendar year 2002 was 98.8% compared to the countrywide average at September 30, 2003 of 61.8%. This was likely the result of several winter storms and a tornado or two that struck Maryland during 2002. Homeowners’ insurance premium comprised 10.6% of the P&C premium written in Maryland and 10.7% of the premium written countrywide.

What surprised the most was that Maryland’s Medical Malprac-tice premium for calendar year 2002 was $209,685,000. I expected it to be less. It was 3.1% of the premium written in Maryland. The national average was 2.5%.

The Maryland economy is not yet robust; however, the employed civilian population comprises nearly one half of the population. It is distributed as follows:

Given the anticipated growth in the number of jobs in Maryland, the need for additional diversification of the economy and the need to decrease the average loss ratio, I would expect the growth rate of Maryland’s P&C direct written premium written to exceed the growth rate countrywide.

This article was written by Joseph L. Petrelli, President and founder of Demotech, Inc. Demotech, Inc. is a Columbus, Ohio based financial analysis and actuarial services firm. Mr. 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.

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