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OHIO'S AUTO INSURANCE PREMIUMS REMAIN BELOW US AVERAGE

COLUMBUS-A study released in July by the National Association of Insurance Commissioners (NAIC) finds Ohioans paid an average of $682.67 for full coverage auto insurance in 2001, which is $134.76 less than the national average of $817.43. The state's combined average premium (auto insurance that includes liability, collision and comprehensive coverages) is lower than all but nine states.

The NAIC study compared 2001 average annual auto insurance premiums for all states and Washington DC. (2001 premium comparisons by coverage for Ohio and the US)

New Jersey continues to lead the nation with an average auto insurance premium of $1,182.54, followed by New York and Washington DC. Those with lower combined average premiums than Ohio include less populated states primarily in the Midwest. Ranking 43 through 51, in order, were: Wyoming, Nebraska, North Carolina, South Dakota, North Dakota, Wisconsin, Idaho, Maine and Iowa, with the lowest average combined premium of $596.44. (State-by-state coverage comparisons)

Upon analyzing the results, Ohio Insurance Institute (OII) President Daniel J. Kelso noted that the 2001 average premium figures reflect the rise in premiums that began in 2000.

According to the Ohio Department of Insurance, the top 10 writers of private passenger auto insurance (representing about 70% of Ohio's market) implemented average premium increases of 1.1% in 2000, 4.5% in 2001 and 3.8% in 2002. The Insurance Information Institute (III) reports national auto insurance increases between 2000-2002 averaged about 4.7% annually.

The OII reports that although increases are inevitable, they aren't insurmountable.

"There are a number of factors working in favor of Ohio auto insurance consumers," said Kelso.

AM Best data for 2001 shows that only one state, Illinois, has more auto insurance providers than Ohio. In 2001, there were 624 companies licensed to write auto insurance in the Buckeye state, with Ohio's total auto premium volume ranking ninth in the nation.

"Ohio's strong insurance market, combined with its stable regulatory climate, creates a favorable business environment for insurers," he said. "Competition in Ohio among insurers has suppressed premium increases to a degree and as a result, consumers haven't been subjected to rate hikes as severe as in other parts of the country."

The Institute reports that the state's financial responsibility (FR) law provides options other than insurance to comply with state law. This is not the case in pure compulsory auto insurance states. Most Ohio drivers comply with the law through auto insurance. The OII president noted that in pure compulsory insurance states, consumers have fewer insurer choices and competition is often more limited.

Ohio's insurance industry has its Achilles' heel. According to Kelso, the Ohio Supreme Court has taken numerous liberties in its interpretation of Ohio statute regarding auto insurance coverages, expanding them beyond the intent of the policy. A series of 4-3 court decisions expanded Ohio's uninsured/underinsured (UM/UIM) motorists insurance statute required remedy through the Ohio General Assembly.

"Consumers are still feeling the effects of these decisions through higher auto liability insurance premiums," said Kelso.

Upon analyzing 1997-2001 state auto liability insurance trends, Kelso noted that Ohio's liability insurance premiums rose about 2.2% while the US average liability premium decreased about 6.2%. Ohio's 2001 average liability insurance premium ranks 30th in comparison to other states and Washington DC. The state had a premium decrease in auto liability coverage in 1999 and 2000, according to the NAIC report. Liability insurance provides protection against at-fault injuries to others, damage to their vehicles and other property, and lawsuits commonly associated with personal injury attorneys. In the NAIC study, uninsured/underinsured motorists coverage is included under liability insurance.

"We're expecting Ohio's liability coverage premiums to reflect the outcome of Ohio Supreme Court decisions for several years," said the OII president.
The Institute reports that between 1997-2001, collision coverage in Ohio rose about 15% compared to the US average of 15.1%, and Ohio's comprehensive coverage increased about 8.7% while the average US increase was 5.6%. Only Hawaii has a lower average comprehensive premium than Ohio. (Ohio's five-year average premiums)

"Ohioans continue to receive a good return on their auto insurance dollar despite recent premium trends," said Kelso.

Factors contributing to the cost of auto insurance are also on the rise. Ohio's average auto labor repair costs rose an average of 17.5% between 1998-2002, according to an OII study. Typical costs for treating an auto accident victim range from $6,000 to $9,000 but can easily run higher. Ohio's average per diem hospital stay rose 12.9% between 1995-1999. Double-digit increases in costs associated with new cars, physician services and property damage claims also contribute to the rise in premiums.

For cost-savings tips, contact the OII at 172 E. State St., Columbus, OH 43215-4321; 614-228-1593 for a copy of "Insurance Consumer Tips" or download the brochure now.

The Ohio Insurance Institute is a trade association representing insurance companies and agent groups for the property/casualty insurance industry. A primary objective of the OII is to help Ohioans achieve a better understanding of insurance and related safety issues.

Additional information:

From OII's 2002 Ohio Insurance Facts
2000 Auto Insurance Premiums in Selected Cities
1999 US Auto Insurance Premiums by State
Insurance cost saving tips