The Aloha State – More than Beaches and Rain Forests

The United States Census Bureau’s Census 2000 estimated the population of the state of Hawaii at 1,211,537. Approximately 85 percent of the adult residents had graduated from high school and about 26 percent had earned a bachelor’s degree or higher. The capital city, Honolulu, has a population of 371,657.

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

From a P/C insurance perspective, during 2003, Hawaii accounted for $1,776,350,000 of direct written premium. Countrywide, the aggregate was $449,686,934,000 of P/C insurance written. Hawaii calendar year 2003 loss and defense cost containment ratio of 50.6 percent was well below the comparable countrywide 2003 ratio of 67.6 percent. It was interesting to note that in the absence of active storms, Hawaii’s Homeowners’ loss and defense cost containment ratio for calendar year 2003 was 23.0 percent compared to the countrywide average of 61.3 percent.

What surprised me the most was that Hawaii loss and defense cost containment ratio outperformed the comparable countrywide averages for all major lines of insurance, and virtually all lines of insurance reported.

The Hawaii economy is heavily dependent on tourism including conventions and agricultural exports. The employed civilian population comprises only 44 percent of Hawaii’s population. It is distributed as follows:

Given the anticipated growth in the number of jobs located in Hawaii and the lack of diversification of the Hawaii economy, I would expect the growth rate of Hawaii’s 2004 P/C insurance marketplace, as measured by the growth in direct premium written, to lag the growth rate experienced on a countrywide basis.

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 Hawaii Property Casualty