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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 markets.

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 nation.

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 market.

According to a report by Conning Insurance Research & Publications (Hartford, CT), premiums written for high-risk drivers totaled $4.4 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 2002—about 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 state’s 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:

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 Book 2004

In 2002, some 385 insurance companies specialized in the nonstandard auto insurance market. These companies are part of 60 major insurance groups.