Minnesota: An Inside Look at the Land of Lakes

The U.S. Census Bureau’s 2000 census estimated the Minnesota population at 4.9 million. About 88 percent of the adult residents had graduated from high school and about 27 percent had earned a bachelor’s degree or higher. The capital, St. Paul, has a population of 287,151.

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

From a property/casualty insurance perspective, Minnesota accounted for $8.1 billion of direct written premium in 2003. Countrywide, the direct premium written in 2003 was $445 billion. Minnesota’s calendar-year 2003 loss and loss adjustment expense ratio of 71.5 percent was above the countrywide 2003 loss and loss adjustment expense ratio of 67.6 percent.

It was interesting to note that Minnesota’s homeowners loss and loss adjustment expense ratio for calendar-year 2003 was 35.3 percent compared to the calendar year 2003 countrywide average of 61.2 percent. With homeowners insurance premium comprising 12.3 percent of the P/C premium written in Minnesota, the exceptionally good homeowners loss ratio favorably impacted the overall statewide average for all lines of insurance. Homeowners premium comprised 10.8 percent of the premium written countrywide.

What surprised me the most was that Minnesota farmowners insurance premium for calendar-year 2003 was $70.7 million. I expected it to be less. How long can their growing season be? Perhaps the 17,674 farming, fishing and forestry employees are dominated by forestry and fishing employees.

The employed civilian population comprises 52 percent of Minnesota’s population. It is distributed as follows:

Given the anticipated growth in the number of jobs located in Minnesota, the diversification of the Minnesota economy and its loss and loss adjustment expense ratio for calendar year 2003, I would expect the 2004 growth rate of Minnesota’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, 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.