FOR RELEASE ON:  June 29, 2000
FOR INFORMATION:  Mary Bonelli/Mitch Wilson: 614.228.1593

COST OF OHIO AUTO INSURANCE REMAINS LOWER THAN MOST STATES

COLUMBUS-With Ohio motorists facing higher fuel costs, at least one auto-related expense continues to remain affordable. According to a study released this spring by the National Association of Insurance Commissioners (NAIC), Ohioans paid an average of $641.36 for auto insurance in 1998, which is $155.87 less than the national average of $797.23. The state's average combined premium (auto insurance that includes liability, collision and comprehensive coverages) is lower than all but nine states.

The NAIC study compared 1998 average annual auto insurance premiums for all states and Washington DC. Ohio moved up two spots in the affordability standings from last year. (Click here for Table 1, 1998 premium comparisons for Ohio and the U.S. by specific coverage in PDF format.)

The Buckeye state's 1998 combined average premium came in 42nd in comparison to other states and the District of Columbia. Continuing to rank first or highest in the study was New Jersey with an average auto insurance premium of $1,305.70, followed by Washington DC and New York. Those with lower combined average premiums than Ohio include less populated states primarily in the Midwest. Ranking 43 through 51 in the study, in order, were: Virginia, Nebraska, South Dakota, Vermont, Wisconsin, Idaho, North Dakota, Maine and Iowa with the lowest average combined premium of $530.65. (Click here for Table 2, 1998 state-by-state comparisons by coverage in PDF format.)

Upon analyzing the results, Ohio Insurance Institute (OII) President Daniel J. Kelso noted that Ohioans continue to pay lower premiums which can be attributed, in part, to the state's competitive auto insurance market, safer drivers and vehicles, current Ohio auto insurance requirements and falling new car prices.

According to the OII, most of the states with higher auto insurance premiums have compulsory auto insurance laws in place, while Ohio maintains a financial responsibility law. The OII president also noted that there are often fewer insurance companies for consumers to choose from in these states because compulsory auto insurance laws often result in over-regulation which can be a deterrent to writing new business.

"Ohioans benefit from the hundreds of insurers that write auto insurance in the Buckeye state," he said. "The overwhelming majority of Ohioans who wish to comply with the state's financial responsibility law through insurance find coverage through companies. In fact, only three states have more auto insurance providers than Ohio."

According to the Ohio Department of Insurance, there are over 900 property/casualty companies licensed in the state, the majority of which offer auto insurance. Ohio's strong insurance market, combined with its stable regulatory climate, creates a favorable business environment for insurers.

Upon analyzing trends in the various auto insurance coverage lines, Kelso noted further deterioration in the cost of Ohio's auto liability coverage, while the average cost of collision and comprehensive coverages improved. 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. It's the coverage Ohioans carry in order to comply with Ohio's financial responsibility law. For this study, uninsured/underinsured motorist (UM/UIM) coverages were also included under liability insurance. Ohio's 1998 average liability insurance premium ranks 29th in comparison to other states and Washington DC, slipping two spots since last year's report. The state's average collision coverage (covers the cost of repairing an insured's vehicle due to a crash) premium ranks 37th, an improvement from its 35th spot in 1997, while Ohio's 1998 average comprehensive coverage premium was the lowest in the country, coming in 51st. Comprehensive coverage provides protection to the insured's vehicle when damaged by perils other than collision such as theft, flooding or tornadoes.

The Institute reports that between 1994-1998, Ohio's liability insurance premiums rose 10.1% compared to the national average increase of 1.4%. Collision coverage in Ohio rose 21.3% compared to the U.S. average of 18.7%. Ohio's comprehensive coverage increased 6.8% while the average U.S. increase was 10.7%. (Click here for Table 3, Ohio's five-year average premium comparisons by coverage in PDF format.)

"We expect this trend in liability coverage costs to become even more prevalent in the next few years due to the unpredictable nature of the Ohio Supreme Court," said the OII president. "Some of the court's recent rulings have played a role in the rising cost of liability insurance coverage, expanding coverage beyond its intended scope."

"This mirrors the national trend," said the OII president. "Costs associated with settling auto claims are on the rise, including medical costs and jury awards."

According to the Insurance Information Institute's chief economist, Robert Hartwig, the pace of medical inflation is up nearly 50% since 1997, while the median jury verdict in vehicular accidents is up 23%.

"When you add in the factor that insurers are basically prohibited from using generic parts of like kind and quality in repairing damaged vehicles, you might ultimately be adding $4 to $5 billion on to the annual cost of insurance," noted Hartwig.

The picture is not all doom and gloom for Ohioans.

"Despite the fact that Ohio consistently ranks as one of the top states in terms of total vehicle miles driven annually and in the numbers of licensed drivers and registered vehicles on our roads, Ohioans continue to receive a good return on their auto insurance dollar," said Kelso. (Click here for Tables 4-6 in PDF format.)

The OII also offers its free "Insurance Consumer Tips" brochure that includes tips to help keep auto insurance premiums down. Contact the OII at P.O. Box 816, Columbus, OH 43126; 614-228-1593 for a copy or download the tips from the OII website at www.ohioinsurance.org.

The Ohio Insurance Institute is a trade and public information 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.

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NOTE: See pages 15-17 in the 2000 edition of Ohio Insurance Facts for 1998 average auto insurance premiums for selected Ohio cities, and the 1997 U.S. auto insurance premium information by state. Page 21 provides tips on how to save on auto insurance.