Insuring the Cornhusker State

The U.S. Census Bureau’s 2000 census estimated Nebraska’s population at 1.7 million. About 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, Lincoln, has a population of 225,581.

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

From a property/casualty insurance perspective, during calendar-year 2003, Nebraska accounted for $2.9 billion of direct written premium. Countrywide the aggregate was $449.7 billion of P/C insurance written. Nebraska’s calendar-year 2003 loss and defense and cost containment (DCC) ratio of 59.4 percent was above the comparable countrywide 2003 loss ratio of 67.6 percent. It was interesting to note that Nebraska’s ocean marine loss and DCC ratio for calendar-year 2003 was 147.2 percent compared to the countrywide average of 63.4 percent. Ocean marine insurance premium comprised one-tenth of 1 percent of the P/C premium written in Nebraska. Ocean marine premium comprised six-tenths of 1 percent of the premium written countrywide.

Nebraska’s homeowners insurance loss experience outperformed the countrywide average. Personal automobile liability insurance had an identical loss and DCC ratio. All things considered, the personal lines experience in Nebraska was quite favorable during 2003.

The Nebraska economy needs to be diversified to be able to leverage its skilled and educated workforce. The employed civilian population comprises nearly 52 percent of Nebraska’s population. It is distributed as follows:

Given the anticipated growth in the number of jobs located in Nebraska and the need for diversification of the Nebraska economy, I would expect the growth rate of Nebraska’s P/C insurance marketplace, as measured by the percentage change in the growth rate of direct premium written, to lag 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. Find out more by visiting its Web site, www.demotech.com.