A Beacon Journal colleague recently complained that his six-month auto insurance premium was up 17% even though he had no claims, fines, or other changes in his family’s driving habits.
His insurance agent said auto insurance rates were going up statewide.
So I reached out to both 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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Have there been automatic rate increases in Ohio?
Yes, according to the Ohio Department of Insurance. After two years of average auto insurance rate declines in 2019 and 2020, there was an average rate increase of 2.7 percent in 2021, Denhard said. This is according to data from the state’s 10 largest insurance groups, covering 80 of the market, he said.
Denhard provided data for 10 years through 2021 (2022 data is not yet available). Average rates rose everywhere from a low of 0.5% (2018) to a high of 3.5% (2017), before dropping by -1.7% in 2019, -3.7% in 2020 and then by 2.7% increase in 2021.
Several factors can affect auto insurance rates, including driving habits, driving violations, amount of cars driven, vehicle type, damage claims, repair and material costs and medical expenses, Denhard said.
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Fadel said insurance rates are “driven by the economy. If you look at what it costs to replace a vehicle now (with supply chain issues and price increases) compared to what it cost two years ago or even last year then that’s a lot more.
“Suppose your car breaks down and you need a rental car. Renting a car is going to take much longer because it will take longer to replace or repair your car. Parts are also more expensive. Cars are generally more expensive,” said Fadel. “If your car is a total loss, it costs a little more than even a few years ago to put you in a new car. “
There are standards for making rates that must be approved for each business by the Ohio Department of Insurance, Fadel said.
So all taxpayers are paying higher costs, regardless of whether they have had claims or amendments due to rising costs?
“We all put money in a pot and the hope is that only a few people have to pull out of it,” said Fadel.
Fadel also pointed out that when the COVID-19 pandemic hit, most insurers issued some refunds or credits because there were fewer cars on the road.
“But what happened was that even though there was less driving, it didn’t necessarily translate into lower claims costs because what happened was people were still wrecking their cars,” he said.
Some had “got out of hand,” he said.
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“During my commute to work when I came downtown right after business closed, I felt like I-670 in Columbus was like driving on the German Autobahn,” said Fadel. “Cars were literally passing me at 100 miles per hour and that translated into increased accident severity. So those costs have risen sharply.”
Then rising costs associated with supply chain issues came along, he said.
How are Ohio’s insurance rates compared to what’s happening nationally?
Historically, Ohio has had one of the lowest average auto insurance premiums in the country, Denhard said. Ohioans paid an average of $802 — 11th lowest in the nation — for car insurance in 2019, according to the most recent data from the National Association of Insurance Commissioners. The national average was $1,070.
Should consumers, especially employees whose jobs have become more remote or hybrid since the pandemic, contact their insurer to reevaluate coverage?
Yes, according to Fadel and Denhard. “While driving activity has increased for many people, some people may have changed their driving frequency,” Denhard said. “Most companies consider mileage as an assessment factor when calculating the premium amount. Some companies monitor when, where and how far a person drives 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 for lowering their premium amount.
Fadel agreed that people should communicate any changes in driving, commuting and where they park their cars to their agent.
“That’s where the agent plays a valuable role for the consumer,” he said.
Are there possibly similar increases for home insurance?
Yes, Fadel said. Wood, labor, and roofing materials have all gone up in price, meaning replacement costs for damage have also gone up.
Is there any relief in sight or is it like with anything, costs are rising?
Fadel said he doesn’t have a crystal ball, so he doesn’t know what’s going to happen with the economy.
“But I can tell you that we are one of the most fiercely competitive markets and when companies are able to lower rates, they do it because they want to gain as much market share as possible,” he said.
Any other tips?
Fadel warned consumers about underinsurance.
“Insurance is like anything else to a certain extent; you get what you pay for. So make sure you look at your coverage and understand the scope of your coverage,” he said. “You may be putting yourself at greater risk by saving a few hundred dollars.
“I would caution people to be careful and make sure they are working with an agent and that they have adequate coverage that meets their individual needs.”
Fadel suggested conducting an annual check with your agent on your auto and homeowner insurance needs, especially if you’ve made any sort of upgrades or renovations to your home.
Denhard said consumers with insurance issues or questions can contact the Ohio Department of Insurance at 800-686-1526, [email protected] and at www.insurance.ohio.gov.
Beacon Journal staff reporter Betty Lin-Fisher can be reached at 330-996-3724 or [email protected] Follow her @blinfisherABJ on Twitter or www.facebook.com/BettyLinFisherABJ For her most recent stories and columns, visit www.tinyurl.com/bettylinfisher