The Silver State – Sagebrush, Hoover Dam and Vegas

The United States Census Bureau’s Census 2000 estimated the population of the state of Nevada at 1,998,257. Approximately 81 percent of the adult residents had graduated from high school and about 18 percent had earned a bachelor’s degree or higher. The capital, Carson City, has a population of 52,457.

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

From a P/C insurance perspective, Nevada accounted for $3,096,207,000 of direct written premium. Countrywide as of Sept. 30, 2003 the aggregate is $313,781,216,000 of P/C insurance written. The Nevada calendar year 2002 loss ratio of 79.8 percent was above the countrywide year-to-date Sept. 30, 2003 loss ratio of 62.3 percent. It was interesting to note that Nevada’s medical malpractice loss ratio for calendar year 2002 was 174.9 percent compared to the countrywide average at Sept. 30, 2003 of 73.6 percent. Medical malpractice insurance premium comprised 2.6 percent of the P/C premium written in Nevada. Medical malpractice was 2.5 percent of the premium written countrywide.

What surprised me was that Nevada farmowners insurance premium for calendar year 2002 was $4,865,000. I expected it to be all but non-existent. In a state with 2,499 farming, fishing and forestry employees, perhaps that is about right.

The Nevada economy is dependent on tourism. The employed civilian population comprises less than half of Nevada’s population. It is distributed as follows:

Given the anticipated growth in the number of jobs located in Nevada, enhanced airline security and the level of diversification of the Nevada economy, I would expect the growth rate of Nevada’s P/C insurance marketplace, as measured by direct premium written, to approximate the growth rate experienced on a countrywide basis.

Click Image to Enlarge Chart

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.

Topics Property Casualty