What Insurance Means To Ohioans
When people think about insurance, they probably think about the last insurance premium they paid, the auto accident they had last year or the trip last month to the emergency room. This is what’s expected. In 2004, 6.9% of American household expenditures were allotted to insurance needs (see chart below).
What insurance is
A universal complaint heard by auto insurance companies is, “My insurance rates have increased even though I haven’t had an accident!” Why does this occur? Because individuals may not have a clear understanding of how insurance works. A common misconception about insurance is that it works like a savings account. An individual continues to pay premiums year after year, thinking that premium payments are placed in an “account” to pay for future incurred losses. This is not the way insurance works.
In simplest terms, insurance is a concept where “many people share the losses of the comparatively few.” This concept does not necessarily provide comfort until you become “one of the few.” The purpose of insurance is to help pay for losses that ordinarily you wouldn’t be able to afford on your own. Without insurance, few people could afford the risk of owning a home or car. Lenders could not afford the risk of making loans for a new business venture or factory construction. And medical assistance or surgery would not be an option for many without the coverage insurance provides.
What insurance means to Ohio’s economy
Ohio is a leading insurance state with 265 insurance companies domiciled in the state (Ohio Department of Insurance as of 5/06). Ohio ranked sixth in the US based on the number of property/casualty insurance companies domiciled within the state in 2004, according to the National Association of Insurance Commissioners.
As a part of the financial services sector, Ohio’s insurance industry provides stable employment to about 105,800 (2005 figure from: Ohio Department of Job and Family Services, Labor Market Information Bureau). For more employment information, see “Ohio and US Insurance Employment Statistics.”
For more information on the industry’s economic impact in Ohio go to www.ohioinsurance.org/pdf/Insurance_Brochure.pdf.
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A 2004 Harris Poll found that about four out of five homeowners believed that their homes had increased in value, but less than two-thirds (63%) said they had updated their homeowners insurance accordingly.
(The Wall Street Journal, 9/15/05) |
If insurance ceased for a year
Insurance is just one of the factors that enables Ohioans to make long-term commitments and secure a better future. In 2005 insurance played a role in:
- 50,108 new family dwellings and apartments that broke ground
- 15,549 new businesses that were formed, creating new job markets
- $9.4 billion in wages earned by Ohio’s 232,518 construction industry employees
- The sale of 258,996 cars and 310,098 trucks from Ohio dealerships
- Protecting Ohio’s 8.8 million licensed drivers by providing auto insurance through a strong, competitive market
- Nearly $5.4 billion paid to Buckeye residents employed by the state’s insurance industry
- Providing protection to Ohio’s 4,836 schools, along with enabling the construction and renovation of new and existing school buildings and
- Supporting a $163 billion Ohio retail sales industry.
Ohioans purchase insurance to protect their assets and as a means of financial security. The insurance industry covered personal losses well into the billions of dollars in 2005 including:
- Nearly $16.4 billion in property, automobile, medical and other property/casualty insurance losses. These losses include $3.5 billion for personal and commercial automobile accident losses, $842 million in direct losses paid for homeowners insurance policyholder losses and $98 million in losses related to accident and health and
- $12.1 billion distributed to the beneficiaries of accident and health insurance policies in private companies.
Insurance industry regulator
The Ohio Department of Insurance is the largest consumer protection agency in the state and sole regulator of Ohio’s insurance industry. The department ensures the financial stability of insurers through ongoing reviews, audits and policy-making.
Additionally, the department regulates insurance company rate-setting and compliance standards. The Ohio Department of Insurance preserves Ohio’s healthy insurance climate as well as protects the interests of millions of policyholders. For more information, visit www.ohioinsurance.gov.
Insurance company stability
Property/casualty insurers guarantee the solvency of Ohio companies through the Ohio Insurance Guaranty Association, which is supported by the industry. When an insurance company is declared insolvent all companies operating in the state are assessed on the basis of their share of the statewide insurance market. These funds are used to pay the covered claims and unearned premiums of the insolvent company. For more information, see "Ohio Insurance Guaranty Association."
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Ohio has more insurance companies vying for customers than all but two other states: Florida and Minnesota.
(National Association of Insurance Commissioners (NAIC), based on 2004 premium volume) |
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