For those holding a valid Ohio drivers license, 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.

Close to 100% of Ohio's millions of insured drivers are eligible for coverage through insurance companies, thus making it one of the most favorable markets in the country. According to a 1999 study by the National Association of Insurance Commissioners, Ohio's 1997 auto insurance premiums were nearly $167 less than the national average, with auto premiums that are lower than all but 11 states.

Due to the competitive nature of writing voluntary standard insurance within the state, it's advisable to compare the rates and services of various companies and agencies prior to purchasing insurance. According to the Ohio Department of Insurance 1998 annual report, there are 921 P/C insurance companies licensed in Ohio, the majority of which offer auto insurance. A.M. Best reports that 595 companies wrote auto insurance in Ohio in 1998, making the state eighth highest in direct premium written for this line of business.

Nonstandard markets were originally developed because of the need to fairly assess policyholders based on their driving records. Now they are also used to insure specialty vehicles such as high-powered sports cars or custom-built vehicles. Since insurance is basically a pooling device for policyholders who share in the losses of a few, all would pay more for insurance if separate risk categories weren't established. Roughly 80% of all drivers fall into the standard or preferred auto insurance market. The remaining 20% are finding it easier to secure coverage through insurance companies rather than reverting to state-run pools, because many insurers now offer insurance specifically geared toward the nonstandard market through separate subsidiaries. There are also insurance companies that specialize in insurance products geared toward drivers who accrue multiple moving violations or traffic accidents.

According to a report by Conning Insurance Research & Publications (Hartford, CT), the amount of premiums written for high-risk drivers was $4.4 billion in 1992. A.M. Best data shows direct premiums written in the nonstandard auto insurance market quintupled to over $22 billion in 1997, just five years later. In comparison, the total auto insurance market was $88.4 billion in 1992, rising to $131.6 billion in 1997-about a 49% increase.

A.M. Best Co. data for 1998 shows that nonstandard auto insurers contributed about $23.25 billion of the $117.63 billion in direct auto insurance premiums written in the US. This is about 20% of the auto insurance market, based on premium volume.

Another reason for the growth of the nonstandard market is the availability of data bases combined with high-speed computers enabling insurers to separate moderate risks from high risks for better underwriting capabilities. Also insurance companies have gained more latitude in establishing premiums based on the driving records of their policyholders.

Most nonstandard auto insurers use independent agents as their distribution method. Table 1 below provides a list of the Top US nonstandard insurance companies based on 1998 direct premiums written.

Each state and the District of Columbia manage their own involuntary high risk insurance plans. According to the Automobile Insurance Plans Service Office (AIPSO), over 3.8 million of the over 156 million insured private passenger cars in the US were insured through the involuntary market in 1997 or about 2.46%. This is down from 2.9% of all insured private passenger vehicles insured through state plans in 1996.

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, many more drivers are insured through the involuntary market.

Ohio Auto Insurance Plan 1998 statistics show that only 6 passenger vehicles of the state's 8 million-plus registered passenger vehicles were insured through the plan, making it the smallest plan in the country. Table 2 provides OAIP private passenger vehicle statistics for the last eight years. (Auto plan statistics by state for 1997 are provided on the next page.)

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 start about 50% above the base rates for drivers in the voluntary market. The worse the driving record, the higher the rates.