OII premium trend report: Homeowners and auto insurance premiums remain favorable for Ohioans

FOR RELEASE:
January 10, 2011

FOR INFORMATION:
Dean Fadel: 614.228.1593

OII premium trend report: Homeowners and auto insurance premiums remain favorable for Ohioans

COLUMBUS – The Ohio Insurance Institute (OII) reports that affordable auto and homeowners premiums continue as a mainstay for most Ohioans.

In its updated Ohio auto and homeowners insurance premium trends report, OII notes that the Buckeye state ranks seventh lowest in the US in terms of average homeowners insurance premiums and eleventh lowest in auto premiums.

OII updates its trend report regularly to help consumers understand Ohio’s current insurance environment. This report reflects 2009 Ohio auto and homeowners insurance rate changes released by the Ohio Department of Insurance (ODI) and 2008 homeowners and auto insurance expenditure information released by the National Association of Insurance Commissioners (NAIC) in November and December 2010.

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

Homeowners insurance
NOTE
: OII’s data and ranking information is based on the HO-3 policy, the most common homeowners insurance policy written. It provides coverage for direct losses from all risks except those specifically listed as exclusions from coverage, such as flooding. About 80% of the Ohio and US homeowners market is written through HO-3 policies. While OII figures and ranking information are slightly different than information released by the Ohio Department of Insurance in December 2010, both are correct but use slightly different data. There is a $4 difference in average premiums based on OII and ODI data, with rankings reflecting the difference.

• Based on 2008 data released by the National Association of Insurance Commissioners (NAIC) in November 2010, Ohioans pay $226 less for homeowners (HO) insurance than the US average. The average HO expenditure in Ohio in 2008 was $565 compared to the US average of $791.

• According to the NAIC report, Ohio’s average homeowners insurance expenditure of $565 is the seventh lowest in the US. The six states with a lower average HO expenditure are Delaware, Wisconsin, Washington, Oregon, Utah and Idaho. The average expenditure is based on the type of coverage that most Ohio homeowners purchase, an HO-3 policy. Click here for homeowners insurance expenditures by state, including rankings.

• OII provides Ohio and US average homeowners insurance expenditures for 2003-08 from NAIC homeowners insurance reports. 2009-10 Ohio expenditures are projected by the Ohio Insurance Institute based on NAIC 2008 average expenditure data and the ODI rate change history report for 2009 (9.7% increase). OII used a 3% increase to estimate the 2010 average Ohio expenditure based on the Insurance Information Institute’s 2010 projected increases.

2003  OH:  $476    US:  $668
2004  OH:  $523    US:  $729
2005  OH:  $531    US:  $764
2006  OH:  $530    US:  $804
2007  OH:  $540    US:  $822
2008  OH:  $565    US:  $791
2009  OH:  $620 (OII projection)  US:  $854 (Insurance Information Institute projection)
2010  OH:  $638 (OII projection)  US:  $879 (Insurance Information Institute projection)

• Based on ODI rate reports, between 2005-09 the top 10 Ohio HO writers increased HO premiums an average of 3.6% annually during the five-year period.

• Ohio’s average homeowners insurance premium has risen over the past few years after a decrease of .7% in 2006.

Auto insurance
• Based on 2008 data released by the NAIC in December 2010, Ohioans pay $172 less for auto insurance than the US average. The 2008 average auto insurance expenditure in Ohio was $617 compared to the US average of $789. Ohio’s average expenditure is 11th lowest in the US. Click here for auto insurance expenditures by state, including rankings.

• OII provides Ohio and US average auto insurance expenditures for 2003-08 from NAIC auto insurance reports. 2009-10 Ohio expenditures are projected by the Ohio Insurance Institute based on NAIC 2008 average expenditure data and the ODI rate change history report for 2009 (2.8% increase). OII used a 4% increase to estimate the 2010 average Ohio expenditure based on the Insurance Information Institute’s 2010 projected increases.

2003   OH:  $672    US:  $830
2004   OH:  $680    US:  $842
2005   OH:  $670    US:  $831
2006   OH:  $654    US:  $816
2007   OH:  $628    US:  $796
2008   OH:  $617    US:  $789
2009   OH:  $634 (OII projection)    US:  $844 (Insurance Information Institute projection)
2010   OH:  $660 (OII projection)    US:  $878 (Insurance Information Institute projection)

• Ohio’s average auto premium is less than it was eight years ago. NAIC reported Ohio’s 2003 average auto insurance expenditure was $672. OII estimates that the average 2010 auto insurance expenditure for Ohioans was $660.

• Based on ODI rate reports, between 2005-09 the top 10 Ohio auto writers averaged nearly a 0.3% premium decrease annually.

General points about Ohio insurance premiums
• Not all insurance companies experience the same level or degree of losses (known as loss exposure). The range of premium rate changes reported by various companies in any given year reflects this. For example, the Top 10 Ohio writers of auto insurance reported rate changes from –1.1% (decrease) to 8.9% in 2009, and –2% (decrease) to 2.6% in 2008, according to the ODI. The Top 10 homeowners insurers reported premium rate changes of –2.1% (decrease) to 15.9% in 2009, compared to –0.5% (decrease) to 13.1% in 2008.

• Policyholders insured by the same company may also experience different premium adjustments, depending on coverage choices, personal claims history and company subsidiary.

• In September 2008, Ohio experienced the costliest natural disaster in recent history. Remnants of Hurricane Ike caused $1.255 billion in insured losses in the Buckeye state. Insurers cannot raise premiums to recoup past losses but can make determinations based on future or potential risk.

• Insurers submit rate filings to the Ohio Department of Insurance with actuarial justification for any proposed rate change. The ODI, as the state’s insurance regulator, reviews such filings and can deny any premium revision that is excessive or inadequate.

• Ohio’s home and auto premiums remain affordable. Consumers benefit from the hundreds of companies providing insurance coverage in the Buckeye state. Only IL and IN have more auto insurance providers than Ohio and only IL and PA have more writers of homeowners insurance. Competition helps keep our premiums consistently lower than the US average in both home and auto.

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Resources & references
• NAIC 2008 homeowners insurance report release (Nov. 2010)
• Homeowners insurance expenditures by state (III)
• ODI 2003-09 homeowners insurance premium rate change report
• NAIC 2008 auto insurance report release (Dec. 2010)
• Auto insurance expenditures by state (III)
• ODI 2003-09 auto insurance premium rate change report
• July 2010 edition of this OII trend report
• OII’s how to save on auto insurance
• OII’s how to save on homeowners insurance