Schwarzenegger Governs One-Eighth of the U.S. Population

The U.S. Census Bureau’s Census 2000 estimated the population of the California at 33,871,648. Approximately 76 percent of the adult residents had graduated from high school and about 16 percent had earned a college degree. California has a number of cities with populations in excess of 100,000.

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

From a P/C insurance perspective, California accounted for $47,139,611,000 of direct written premium. Countrywide, as of Sept. 30, 2003, the aggregate is $313,781,216,000 of P/C insurance written. California calendar year 2002 loss ratio of 70.6 percent was above the countrywide year to date Sept. 30 loss ratio of 62.3 percent. It was interesting to note that California’s homeowners loss ratio for calendar year 2002 was 59.2 percent compared to the nationwide average at Sept. 30 of 61.8 percent. Homeowners insurance premium comprised 9.7 percent of the P/C premium written in California. Homeowners premium comprised 10.7 percent of the premium written nationwide. However, earthquake coverage was an additional 1.3 percent of the premium volume in California. Countrywide the average for earthquake as a percentage of total direct written premium was 0.3 percent.

The California economy is robust and diversified. The employed civilian population comprises less than half of California’s population. It is distributed as follows:

From a workers’ compensation insurance perspective, workers’ comp comprised 11.4 percent of the P/C insurance marketplace in California. Contrast this to the countrywide percentage of 8.6 percent. Given that there is likely to be a higher level of self-funded workers’ compensation in California than countrywide, California’s workers’ comp crisis will remain at center stage. Similarly, a comparison of loss ratios shows California at 110.6 percent versus countrywide at 71.2 percent, indicated cause for concern.

Given the anticipated growth in the number of jobs located in California and the diversification of the California economy, I would expect the growth rate of California’s P/C insurance marketplace, as measured by direct premium written, to exceed the growth rate experienced on a countrywide basis. Increases in workers’ comp rates, homeowners insurance and earthquake rates will be leading the way.

Topics California USA Workers' Compensation Homeowners Property Casualty