Texas-More than Just the Alamo and Football

The United States Census Bureau’s Census 2000 estimated the population of the State of Texas at 20,851,820. Approximately 76 percent of the adult residents had graduated from high school and about 16 percent had earned a bachelor’s degree. Texas has a number of cities with populations in excess of 100,000.

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

• Agriculture, forestry, fishing and hunting, and mining—247,697 employed
• Construction—743,606
• Manufacturing—1,093,752
• Wholesale trade—362,928
• Retail trade—1,108,004
• Transportation and warehousing, and utilities—535,568
• Information—283,256
• Finance, insurance, real estate, and rental and leasing—630,133
• Professional, scientific, management, administrative and waste management services—878,726
• Educational, health and social services—1,779,801
• Arts, entertainment, recreation, accomodation and food services—673,016
• Other services (except public administration)—480,785
• Public administration—417,100

From a P/C insurance perspective, Texas accounted for $29,198,037,000 of direct written premium. Countrywide as of Sept. 30, 2003 the aggregate is $313,781,216,000 of P/C insurance written. Texas calendar year 2002 loss ratio of 78.9 percent was above the countrywide year to date Sept. 30, 2003 loss ratio of 62.3 percent.

It was interesting to note that Texas’ homeowners loss ratio for calendar year 2002 was 108.2 percent compared to the countrywide average at Sept. 30, 2003 of 61.8 percent. Homeowners insurance premium comprised 14.7 percent of the P/C premium written in Texas. Homeowners premium comprised 10.7 percent of the premium written countrywide.

What surprised me the most was that Texas farmowners insurance premium for calendar year 2002 was $79,412,000. I expected it to be more. However, in a state with 61,486 farming, fishing and forestry employees, perhaps that is about right.

The Texas economy is robust and diversified. The employed civilian population comprises nearly one-half of Texas’ population. The number of employed civilians age 16 years and over totaled 9,234,372.

The occupational breakdown:

• Management, professional and related occupations—3,078,757
• Service occupations—1,351,270
• Sales and office occupations—2,515,596
• Farming, fishing and forestry occupations—61,486
• Construction, extraction and maintenance occupations—1,008,353
• Production, transportation and material moving occupations—1,218,910

Given the anticipated growth in the number of jobs located in Texas and the diversification of the Texas economy, I would expect the growth rate of Texas’ P/C insurance marketplace, as measured by direct premium written, to exceed 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. Additional information can be found at www.demotech.com

Topics Texas Property Casualty