Updated 2011 premium trend report: Homeowners & auto insurance premiums remain favorable for Ohioans despite increases

FULL REPORT UPDATED:  August 16, 2011
Revised Sept. 1, 2011

COLUMBUS – Despite recent indicators pointing to a likely rise in the cost of coverage, the Ohio Insurance Institute (OII) reports that affordable auto and homeowners premiums continue as a mainstay for most Ohioans. Even with increases looming, the cost of coverage remains considerably lower in Ohio than in most other states. The Buckeye state ranks 7th lowest in the US based on its average homeowners insurance premium and 11th lowest for its average auto insurance premium.

About this report
OII updates its trend report regularly to help consumers understand Ohio’s current insurance environment and the factors affecting it. The August report reflects 2010 Ohio auto and homeowners insurance premium rate changes released August 10, 2011 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.

The Ohio Insurance Institute 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 excluded from coverage, such as flooding. About 80% of the Ohio and US homeowners market is written through HO-3 policies. OII figures and ranking information may be slightly different than information released by the Ohio Department of Insurance. Both are correct but use slightly different data. There is a $4 difference in the homeowners insurance premium data used by the OII and ODI, with the overall ranking 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 7th 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 reports for 2009 (9.7% increase) and 2010 (8.7% increase). The 2009-10 US figures are from the NAIC and Insurance Information Institute (III) estimates based on CPI and other data.

Year

OH Avg. HO Ins. Expenditure

US Avg. HO Ins. Expenditure

2003

$476

$668

2004

$523

$729

2005

$531

$764

2006

$530

$804

2007

$540

$822

2008

$565

$791

2009

$620 (OII projection, 9.7% increase)

$799 (III projection)

2010

$674 (OII projection, 8.7% increase)

$807 (III projection)

• Ohio’s HO premiums remained flat in 2005 with a .7% decrease in 2006. Between 2006-10 the top 10 Ohio HO writers increased HO premiums an average of 5.3% annually during the five-year period based on ODI rate reports.

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 reports for 2009 (2.8% increase) and 2010 (1.5% increase). OII used a 3.7% increase to estimate the 2011 average Ohio auto expenditure based on projections from the Insurance Information Institute from the US Department of Labor data through June 2011.

Year

OH Avg. Auto Ins. Expenditure

US Avg. Auto Ins. Expenditure

2003

$672

$830

2004

$680

$842

2005

$670

$831

2006

$654

$816

2007

$628

$795

2008

$617

$816

2009

$634 (OII projection, 2.8% increase)

$844 (III projection)

2010

$644 (OII projection, 1.5% increase)

$878 (III projection)

2011

$668 (OII projection, 3.7% increase)

$910 (Projection based on 3.7% increase)

• Ohio’s average auto premium is less than it was nine years ago. NAIC reported Ohio’s 2003 average auto insurance expenditure was $672. OII estimates that the average 2011 auto insurance expenditure for Ohioans is $668.

• Ohio’s auto insurance premiums decreased annually between 2004-07 with a slight increase (.7%) in 2008. Between 2006-10 the top 10 Ohio auto insurance writers increased auto premiums an average of .3% annually during the five-year period based on ODI rate reports.

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 a –1.1% (decrease) to an 8.9% increase in 2009, and a –1.1% (decrease) to 5.1% increase in 2010, according to the ODI. The Top 10 homeowners insurers reported premium rate changes of –2.1% (decrease) to an increase of 15.9% in 2009, compared to a range of 1% to 15.6% in 2010.

• Policyholders insured by the same company may also experience different premium adjustments, depending upon such factors as coverage choices, deductibles, personal claims history and company subsidiary.

• Insurers cannot raise premiums to recoup past losses but can make determinations based on future or potential risk. The number of Ohio’s near or $25-million-plus insured loss storms (includes winter storms, tornado, wind and hail losses) during five-year period of 2007-11 (through July 2011) is double that of the previous five-year period (2002-06). Ohio has had at least 14 storms in the current five-year period with losses near or over $25 million compared to seven the previous five-year period.

• Ohio disaster-related insured losses in the current five-year period (2007-11) have increased 175%. The current five-year loss estimates are nearly $2.4 billion compared to $871.1 million for catastrophic storms between 2002-06, a difference of over $1.5 billion.

• Insured losses from Ohio’s six storms this year (through July 2011) are estimated between $537-640 million, which includes a July 10-14 storm event.

• 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. The third costliest disaster (behind this and the 1974 Xenia tornado outbreak) occurred in May 2011 with insured loss estimates of $322-400 million.

• 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 adjustment that is found to be excessive or inadequate.

• Ohio’s home and auto premiums remain affordable. Consumers benefit from the hundreds of companies hat provide insurance coverage in the Buckeye state. Competition asl helps keep Ohio premiums consistently lower than the US average in both home and auto. Only IL has more auto insurance providers than Ohio (Ohio has 400; IL has 405) and IL, NY and PA have more writers of homeowners insurance (Ohio: 255, IL: 291, PA: 279, NY: 270). Source:  A.M. Best, 2009 top writers by state.

Resources & references
NAIC 2008 homeowners insurance report release (Nov. 2010)
Homeowners insurance expenditures by state (III)
ODI 2003-10 homeowners insurance premium rate change report
NAIC 2008 auto insurance report release (Dec. 2010)
Auto insurance expenditures by state (III)
ODI 2003-10 auto insurance premium rate change report
Jan. 2011 edition OII premium trend report
OII winter storm history
OII wind and hail storm history
• OII’s how to save on auto insurance
• OII’s how to save on homeowners insurance