Slow Ill. Job Market May Mean Less P/C Growth

The 2000 census estimated Illinois’ population at 12.4 million. More than 81 percent of the adult residents had graduated from high school and over 26 percent had earned a bachelor’s degree. Chicago’s 2.9 million residents comprised nearly a quarter of the state’s population.

The top 10 employers in Illinois are the state (83,100), the U.S. government (46,600), the Chicago Public Schools (45,800), the U.S. Postal Service (43,200), the city of Chicago (42,800), Wal-Mart (39,700), Jewel/Osco (39,100), Cook County (27,100), SBC/Ameritech (25,900) and the United Parcel Service (25,000). Direct writer State Farm Insurance came in at No. 13 with 23,600 employees in Illinois.

From a property/casualty insurance perspective, Illinois accounted for $19.2 million of 2002 direct premium written. As of Sept. 30, 2003, $313.8 million of P/C insurance was written in the United States.

Illinois’ calendar year 2002 loss ratio of 75.7 percent was above the countrywide nine-month loss ratio of 62.3 percent. Illinois’ diversified economy, in conjunction with an insurance regulatory environment that relies on competitive pressures to control rate levels, seemed to be good news for insurance consumers. That is, insurers returned a higher percentage of premium to insureds in the form of claims.

Given the competitive pressures in the Illinois marketplace, we would expect the Land of Lincoln’s loss ratios to exceed the countrywide average when calendar year 2003 information becomes available.

Similarly, we expect the Illinois economy to continue to grow and diversify. The 2000 census identified the following 15 occupations as high-growth, and estimated the job growth through 2010:

1. Customer service representatives, from 100,000 to 125,000
2. Production workers, from 81,000 to 104,000
3. Registered nurses from, 106,000 to 126,000
4. Food preparation and serving personnel, from 65,000 to 83,000
5. Office clerks, from 136,000 to 154,000
6. Computer support specialists, from 22,000 to 38,000
7. Waiters and waitresses, from 84,000 to 101,000
8. Computer software engineers, from 19,000 to 36,000
9. Business operations specialists, from 62,000 to 78,000
10. Truck drivers (heavy and tractor-trailer), from 91,000 to 107,000
11. Construction laborers, from 49,000 to 62,000
12. Security guards, from 39,000 to 55,000
13. Janitors and cleaning personnel, excluding maids from 118,000 to 133,000
14. Cashiers from145,000 to 159,000
15. Retail sales persons from 161,000 to 174,000

Given the level of anticipated growth in the number of jobs located in Illinois, the diversification of the Illinois economy and an insurance marketplace that utilizes competition to regulate availability and affordability, I would expect the growth rate of Illinois’s P/C marketplace — as measured by direct premium written — to be somewhat smaller than the growth rate in states of comparable population and economic diversification.

Joseph L. Petrelli is president and founder of Demotech Inc. (www.demotech.com), a Columbus, Ohio-based financial analysis and actuarial services firm. He is a member of the three leading actuarial societies.

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