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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 residual (shared) 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
Nearly all of Ohio’s 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 2004 study by the National Association of
Insurance Commissioners, Ohio’s 2002 average auto insurance
expenditure was over $134 less than the US average (click
here for more information).
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 961 P/C
insurance companies licensed in Ohio.
A.M. Best reports that 416 companies were writing private passenger
auto insurance in the Buckeye state in 2003, the most in the country.
Ohio’s total auto premium volume ranks ninth 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.
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 (also known as residual
or shared market) because many insurers also offer insurance specifically
geared toward the nonstandard market through separate subsidiaries
and/or risk categories. There are also specialty insurers whose
only business is the nonstandard market.
In 2002 direct premiums written for the nonstandard auto market
represented about one-fifth of the total private passenger auto
insurance 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.
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.
Residual (shared) market
Each state and the District of Columbia manage a shared market
insurance plan. Most are known as Automobile Insurance Plans. According
to the Automobile Insurance Plans Service Office (AIPSO), about
2.65 million of the over 168.8 million insured private passenger
vehicles in the US were insured through the residual market in
2002,
or about 1.57%. This is a slight uptick from 1.45% of private passenger
vehicles insured through state plans in 2001. See the next section for auto plan statistics by state.
Table 1 provides a 2003 premium comparison between the total US
auto insurance market and the residual market by line. The portion
of total direct written auto premiums generated by the residual
market remained at 2.0%, the same as in 2002.
AIPSO reports a 5.5% increase in residual market premiums in 2003,
for total of over $3.6 billion compared to over $3.4 billion in
2002.
The number of cars insured through state shared market 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 11 vehicles
(two private passenger and nine commercial) of the state’s
12.1 million registered vehicles were assigned to the plan in 2004,
making it one of the smallest plans in the country. Table
2 provides
OAIP private passenger vehicle activity for 2000–2004. For
auto plan statistics by state for 2002 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
poorer the driving record, the higher the rates.
For more information, go to www.assignedriskohio.com.
NOTE: Some totals may not balance due to rounding. Percentages
were calculated using rounded numbers.
Source: Automobile Insurance Plan Service Office, AIPSO Facts 2004-2005 
Sources: Ohio Automobile Insurance Plan; Automobile Insurance Plan Service
Office, AIPSO Facts 2004-2005; and Ohio Bureau of Motor Vehicles
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Congestion delayed travelers 79 million
more hours and wasted 69 million more gallons of fuel in 2003
than in 2002, the Texas Transportation Institute's (TTI) 2005
Urban Mobility Report found. Overall in 2003, there were 3.7
billion hours of travel delay and 2.3 billion gallons of wasted
fuel for a total cost of more than $63 billion. Americans spent
an average of 300 hours in their vehicles in 2002, according
to TTI. |
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