UPDATED January 2012 premium trend report: Ohio auto premiums now 10th lowest; homeowners 6th lowest in US

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 6th lowest in the US in homeowners insurance and 10th lowest in auto insurance based on its average insurance premium expenditures.

About this report (revised 1/24/12)
OII updates its trend report regularly to help consumers understand Ohio’s current insurance environment and the factors affecting it. The January 2012 report reflects 2010 Ohio auto and homeowners insurance premium rate changes released August 10, 2011 by the Ohio Department of Insurance (ODI) and 2009 homeowners and auto insurance expenditure information from the National Association of Insurance Commissioners (NAIC).

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 (revised 1/13/12)
NOTE: OII’s data and ranking information is based on the HO-3 policy, the most commonly purchased homeowners insurance policy written. It provides coverage for direct losses from all risks except those specifically excluded from coverage, such as flooding. About 78% of the Ohio market and 79% of 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.

• Based on 2009 data released by the National Association of Insurance Commissioners (NAIC) in January 2012, Ohioans pay $267 less for homeowners (HO) insurance than the US average. The average 2009 Ohio HO expenditure was $613 compared to the US average of $880.

• According to the January 2012 NAIC report, Ohio’s average homeowners insurance expenditure of $613 is 6th lowest in the US. States with lower average HO expenditures are Idaho ($485), Wisconsin ($542), Oregon and Utah–tie ($544), Washington ($552) and Delaware ($610). The average expenditure is based on the type of coverage that most Ohio and US homeowners purchase, an HO-3 policy. Click here for homeowners insurance expenditures by state, including rankings. Ohio’s previous ranking was 7th lowest based on 2008 NAIC data.

• OII provides Ohio and US average homeowners insurance expenditures for 2003-09 from NAIC homeowners insurance reports. 2010 Ohio expenditures are projected by the Ohio Insurance Institute based on NAIC 2009 average expenditure data and the ODI rate change history reports for 2010 (8.7% increase). The 2010 US figures are based on the 2009 NAIC data and Insurance Information Institute (III) reports based on CPI and other data, estimated at a 3.5% increase for the year.

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 $613 $880
2010 $666 (OII projection, 8.7% increase) $911 (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 (last revised 1/24/12)
• Based on 2009 data released by the NAIC in January 2012, Ohioans pay $169 less for auto insurance than the US average. The 2009 average auto insurance expenditure in Ohio was $616 compared to the US average of $785. Ohio’s average expenditure is 10th lowest in the US. Click here for auto insurance expenditures by state, including rankings.

• OII provides Ohio and US average auto insurance expenditures for 2003-09 from NAIC auto insurance reports. 2010 Ohio expenditures are projected by the Ohio Insurance Institute based on NAIC 2009 average expenditure data and the ODI rate change history reports for 2010 (1.5% increase). The 2010 US average is based on US Bureau of Labor Statistics’ consumer price index (CPI) data showing a 5.1% increase in auto insurance for the year. 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 $832
2006 $654 $817
2007 $628 $797
2008 $617 $789
2009 $616 $785
2010 $625 (OII projection, 1.5% increase) $825 (III projection based on 5.1% increase)
2011 $648 (OII projection, 3.7% increase) $856 (III 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 (revised 1/13/12)
• 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 the five-year period of 2007-11 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 187%. The current five-year loss estimates are approaching $2.5 billion compared to $871 million for catastrophic storms between 2002-06, a difference of approximately $1.6 billion.

• Insured losses from Ohio’s six storms in 2011 are estimated between $568-658 million.

• 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) was a series of severe thunderstorms that 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 that provide 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 Ohio premiums consistently lower than the US average in both home and auto.

Resources & references (revised 1/24/12)
NAIC 2009 homeowners insurance report release (Jan. 2012)
Homeowners insurance expenditures by state (III)
• ODI 2003-10 homeowners insurance premium rate change report
NAIC 2009 auto insurance report release (Jan. 2012)
Auto insurance expenditures by state (III)
• ODI 2003-10 auto insurance premium rate change report
August 2011 edition OII premium trend report
• OII winter storm loss history through 2011
• OII wind and hail storm loss history through 2011
• OII’s how to save on auto insurance
• OII’s how to save on homeowners insurance

FOR INFORMATION: Dean Fadel/: 614.228.1593
Posted 1/24/12