Where The Auto Insurance Premium Dollar Goes In Ohio And US
In 2000 claims accounted for $83 of every $100 earned in private
passenger auto insurance in the US, up nearly 11% from $75 as reported
in 1998. In Ohio, claims accounted for $77 of every $100 earned
in 2000, an increase from the $73 reported in 1998. Auto premium
dollar information for Ohio and the US are detailed below.
Source: Estimated by the Insurance Information Institute
(III), based on data from A.M. Best Co., Insurance Services Office,
Inc., National Association of Insurance Commissioners and Insurance
Research Council
US expenses—commissions, state premium taxes, general expenses—accounted
for 24% of the premium dollar in 2000 (1% increase from 1998). Expenses
in Ohio increased between 1998 and 2000, from 23% to 25%.
US investments added $10 to income, compared to $12 in 1998, while
Ohio’s investment gain was $12 in 2000, also down from $13
in 1998. The bottom line worked out to less than $1 in after-tax
profit for every $100 in premiums in the US, significantly down
from the $7 figure reported in 1998. In Ohio, there was a $4 after-tax
profit for every $100 in premiums in 2000 compared to $9 reported
in 1998.
Of note, US lawyers’ fees continue to account for $12 out
of every $100 in premiums, with half going to plaintiffs’ attorneys
and half to defendants’ attorneys. The $6 to plaintiffs’
attorneys is taken mainly out of the “pain and suffering and
other noneconomic awards” category. Plaintiffs’ attorneys
are typically paid on a contingency fee basis.
Theft continues to account for about 25% of all comprehensive claims.
The charts below show US premium dollar data for 2000 in graphic
form. The left chart shows where the revenue dollar (premiums and
investment income) comes from, and the right chart shows where the
revenue dollar goes in terms of claims, expenses and profits. Ohio
charts depicting the same information are found below.
Note: These charts are based on every $100 of revenue
plus investment income of $12, for a total of $112.
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A Jury Verdict Research report released
in January 2001 found that juries were more likely to award
million-dollar settlements in certain large and small states
than in most others. Between 1993–99, 25% of jury verdicts
in New York State were for $1 million or more (the highest proportion).
The other states with a high proportion of verdicts of $1 million
or more are (in descending order) NM, ID, MS, NV, PA, AK, MA,
AL, IL and CA.
(The National Law Journal, 2/12/01) |
Note: These charts are based on every $100 of revenue plus investment
income of $13, for a total of $113.
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According to the US Bureau of Transportation
Statistics, there are about 4 million miles of public roads
in the US. This equates to circling the globe more than 157
times or more than 8 round-trips to the moon.
(USA Today, 1/26–28/01) |
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