A Beacon Journal colleague recently lamented that his six-month auto insurance premium increased by 17%, even though he had no claims, fines or other changes in his family’s driving habits.
His insurance agent said that auto insurance rates are rising across the state.
So I contacted Dean Fadel, president of the Ohio Insurance Institute, the state property and casualty insurance trade group, and Robert Denhard, spokesman for the Ohio Department of Insurance, to find out what was going on.
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Were there automatic rate increases in Ohio?
Yes, according to the Ohio Department of Insurance. After two years of declines in the average auto insurance rate in 2019 and 2020, Denhard said the average rate is up 2.7 percent in 2021. According to him, this is the data of the 10 largest insurance groups in the state, which make up 80 market participants.
Denhard provided data for 10 years up to 2021 (2022 data not yet available). Average rates rose from a low of 0.5% (2018) to a high of 3.5% (2017), then fell by -1.7% in 2019, -3.7% in 2020. and then increased by 2.7% in 2021.
Various factors can affect auto insurance rates, Denhard said, including driving habits, driving violations, number of trips, type of vehicle, number of claims, repair and material costs, and medical expenses.
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Fadel said that insurance rates “are determined by the economy. When you look at how much it costs to replace a car now (with supply chain issues and rising prices) compared to what it might have cost two years ago or even last year, it’s a lot more.
“Let’s say your car has broken down and you need a rental car. Renting a car will take much longer because replacing or repairing your car will take longer. Parts are also more expensive. Cars are generally more expensive,” Fadel said. “If your car is completely destroyed, it will cost a little more than even a couple of years ago to put you in a new car. “
Fadel said there are rate calculation standards that must be approved by the Ohio Insurance Department for each company.
So all taxpayers pay higher costs, regardless of whether they had claims or changes due to increased costs?
“We all put money in the bank, and we hope that only a few will be able to extract money from this,” Fadel said.
Fadel also noted that when the COVID-19 pandemic hit, most insurance companies issued some refunds or loans because there were fewer cars on the roads.
“But what happened was that although there were fewer drivers, it didn’t necessarily lead to lower claims costs because people were still breaking their cars,” he said.
Some of them were “out of control,” he said.
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“During my commute, when I was driving downtown, just after closing time, I felt like I-670 in Columbus was like I was driving on the German Autobahn,” Fadel said. “Literally, cars were going 100 miles an hour just passing me, and this resulted in an increase in the severity of accidents. So these costs have increased significantly.”
Then added the rising costs associated with supply chain problems, he said.
What are Ohio’s insurance rates compared to what’s going on in the country?
According to Denhard, Ohio has historically had one of the lowest average auto insurance premiums in the country. Ohio residents paid an average of $802 — 11th in the nation — for auto insurance in 2019, according to the latest figures from the National Association of Insurance Commissioners. The national average was $1,070.
Should consumers, especially workers whose work has become more remote or mixed since the pandemic, contact their insurance company to reassess coverage?
Yes, according to Fadel and Denhard. “While driving activity has increased for many people, some people may have changed the frequency of driving,” Denhard said. “Most companies consider mileage as a rating factor when calculating the premium amount. Some companies track when, where, and how far a person travels to determine the cost of their insurance. If a person’s driving frequency has changed significantly, they should talk to their insurance agent or company to see if there are options to reduce the premium.”
Fadel agreed that people should report any changes in driving, commuting, and where they park their cars to their agent.
“This is where the agent plays a valuable role for the consumer,” he said.
Are there potentially similar increases for home insurance?
Yes, Fadel said. Lumber, labor, and roofing materials have risen in price, which means damage costs have also increased.
Is there any relief, or is it, like everything else, costs going up?
Fadel said he doesn’t have a crystal ball, so he doesn’t know what will happen to the economy.
“But I can tell you that we are one of the most competitive markets, and when companies can cut rates, they do so because they want to get as much market share as possible,” he said.
Any other tips?
Fadel warned consumers against under-insurance.
“Insurance is like everything else to a certain extent; you get what you pay for. So make sure you look at your coverage and understand its coverage,” he said. “You can put yourself at greater risk by saving a couple of hundred dollars.
“I would just warn people to be careful and make sure they are working with an agent and that they have adequate insurance coverage to suit their individual needs.”
Fadel suggested checking with his agent every year for your car and homeowner’s insurance needs, especially if you’ve done any renovations or repairs to your home.
Denhard said consumers with any insurance concerns or questions can contact the Ohio Department of Insurance at 800-686-1526, [email protected] and www.insurance.ohio.gov.
Beacon Journal staff correspondent Betty Lin-Fisher can be contacted at 330-996-3724 or email [email protected] Follow her @blinfisherABJ on Twitter or www.facebook.com/BettyLinFisherABJ.