The Treasure State – Yellowstone, Moose and Legalized Gambling

The United States Census Bureau’s Census 2000 estimated the population of the State of Montana at 902,195. Approximately 87 percent of the adult residents had graduated from high school and about 24 percent had earned a bachelor’s degree or higher. The capital, Helena, has a population of 25,780.

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

From a P/C insurance perspective, during 2003, Montana accounted for $1,331,737,000 of direct written premium. The countrywide aggregate from the same period was $449,686,934,000 of P/C insurance written. Montana’s calendar year 2003 loss and defense and cost containment ratio of 67.6 percent was identical to the countrywide ratio of 67.6 percent. Montana’s farmowners and homeowners loss ratios of 40.6 percent and 45.3 percent were well below the comparable countrywide figures of 62.8 percent and 61.3 percent, respectively.

What surprised me the most was that Montana farmowners insurance premium for calendar year 2003 was only $38,188,000. I expected it to be more. However, in a state with 9,246 farming, fishing and forestry employees, perhaps that is about right.

The Montana economy must find a way to leverage its highly educated work force. The employed civilian population comprises over 47 percent of Montana’s population. It is distributed as follows:

Given the anticipated growth in the number of jobs located in Montana and the diversification of the Montana economy, I would expect the 2004 versus 2003 growth rate of Montana’s P/C insurance marketplace, as measured by direct premium written, to lag the premium growth rate experienced on a countrywide basis.

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. 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.