Auto Insurance Markets
For those holding valid Ohio drivers licenses, there are three
avenues available for auto insurance:
The voluntary standard market, where insurance
is obtained at competitive rates through a selected insurance
company without state assistance.
The voluntary nonstandard market, where insurance
is obtained through a selected insurance company, but with a
higher premium, based on higher risk factors such as an imperfect
driving record or insuring a specialty vehicle.
- The involuntary residual market, known in Ohio
as the Ohio Automobile Insurance Plan (OAIP), is a state plan
that guarantees liability coverage for those who have difficulty
obtaining insurance through the voluntary standard and nonstandard
Ohio’s strong voluntary market
Close to 100% of Ohio’s 7.9 million drivers and their vehicles
are eligible for coverage through insurance companies, thus making
it one of the most favorable private passenger auto insurance markets
in the country. According to a 2003 study by the National Association
of Insurance Commissioners, Ohio’s 2001 average auto insurance
premium was nearly $135 less than the US average, with auto premiums
lower than all but nine states (click
here for more information).
This is based on a full coverage policy.
Due to the competitive nature of writing voluntary standard insurance
within the state, it’s advisable to compare the services and
rates of various companies and agencies prior to purchasing insurance.
According to the Ohio Department of Insurance, there are 974 P/C
insurance companies licensed in Ohio. A.M. Best reports that 420
companies were writing private passenger auto insurance in the Buckeye
state in 2002. Only Illinois has more auto insurance writers than
Ohio. Ohio’s total auto premium volume ranks eighth in the
Voluntary nonstandard market
Nonstandard markets were originally developed because of the need
to fairly assess policyholders based on their driving records. Now
it’s also a niche market for specialized vehicles such as
high-powered sports cars and custom-built vehicles.
Four out of every five drivers have coverage through the voluntary
auto insurance market.
In recent years, the lines between standard and nonstandard markets,
and various levels of risk, have begun to blur. High risk drivers
are finding it easier to secure coverage through insurance companies
rather than reverting to state-run pools, because many insurers
also offer insurance specifically geared toward the nonstandard
market through separate subsidiaries and/or risk categories. There
are also small specialty insurers whose only business is the nonstandard
According to a report by Conning Insurance Research & Publications
(Hartford, CT), premiums written for high-risk drivers totaled
billion in 1992. A.M. Best data shows direct premiums written in
the nonstandard auto insurance market grew nearly seven-fold to
$30.6 billion in 2002. In comparison, the total auto insurance
market was $88.4 billion in 1992, rising to $143.8 billion in
a 61% increase. Table 2 below shows the nonstandard
market in comparison to the total direct premiums written for the
private passenger market for 1995–2002.
In 2002 direct premiums written for nonstandard auto market represented
about one-fifth of the total private passenger auto insurance market.
Most nonstandard auto insurers use independent agents as their
distribution method, although the Internet and toll-free numbers
are distribution methods also employed by insurers.
Involuntary residual market
Each state and the District of Columbia manage their own involuntary
high risk insurance plans. According to the Automobile Insurance
Plans Service Office (AIPSO), about 2.5 million of the over 171
million insured private passenger cars in the US were insured through
the involuntary market in 2001 about 1.45%. This is down from 1.54%
of all insured private passenger vehicles insured through state
plans in 1999.
The number of cars insured through these plans can be viewed as
a “meter” in determining the availability of voluntary
insurance within a state. The smaller the number of assignments
in a state’s plan, the greater the number insured through
the voluntary insurance market. In states where rates are held down
artificially through legislation, more drivers are insured through
the involuntary market.
Ohio Auto Plan
Ohio Auto Insurance Plan statistics show that only 16 passenger
vehicles (seven private passenger and nine commercial) of the
8.5 million-plus private passenger registered vehicles were assigned
to the plan in 2002, making one of the smallest plan in the country.
Table 1 provides OAIP private passenger vehicle activity for 1995–2002.
For auto plan statistics by state for
2001, click here.
OAIP eligibility requirements include a valid drivers license and
a car in safe operating condition. In the plan, each insurance company
operating in Ohio is assigned applications in proportion to its
auto insurance premium volume.
OAIP private passenger vehicle coverages include bodily injury
liability, property damage liability, uninsured/underinsured motorists,
uninsured motorists property damage, medical payments, and comprehensive
and collision with deductibles. The plan guarantees liability coverage,
with most qualifying for additional coverages as well.
Premiums in the involuntary residual market typically start about
50% above the base rates for drivers in the voluntary market. The
worse the driving record, the higher the rates.
For more information, go to: www.assignedriskohio.com.
NA= Not available at press time
Sources: Ohio Automobile Insurance Plan and Automobile Insurance
Plan Services Office (APISO), AIPSO Facts 2003-2004
1 Before reinsurance transactions, excluding state funds
2 Includes premium data from specialty companies whose total business
is nonstandard and nonstandard business from one other insurer
Sources: A.M. Best, Inc. and Insurance Information Institute Fact
||In 2002, some 385 insurance companies
specialized in the nonstandard auto insurance market. These
companies are part of 60 major insurance groups.