A Beacon Journal colleague recently lamented that his six-month auto insurance premium went up 17% despite having no claims, speeding tickets or other changes in his family’s driving habits.
His insurance agent said auto insurance rates were going up nationwide.
So I contacted both Dean Fadel, president of the Ohio Insurance Institute, the state’s 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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Did Ohio have automatic rate increases?
Yes, according to the Ohio Department of Insurance. After two years of declines in the average auto insurance rate in 2019 and 2020, there was a 2.7 percent increase in the average rate in 2021, Denhard said. That comes from data from the state’s 10 largest insurance groups, which make up 80 of the market, he said.
Denhard has provided data for 10 years to 2021 (data for 2022 are not yet available). Average interest rates rose from a low of 0.5% (2018) to a high of 3.5% (2017) before increasing by -1.7% in 2019, by -3.7% in 2020 and then by 2% in 2021. 7% declined.
Various factors can affect auto insurance rates, including driving behavior, driving violations, driving frequency, vehicle type, claims activity, repair and material costs, and medical costs, 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 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 it will take longer to replace or repair your car. Parts are also more expensive. Cars are generally more expensive,” Fadel said. “If your car is totaled, it costs a little more than it did a few years ago to put you in a new car. “
There are standard rates that must be approved by the Ohio Department of Insurance for every company, Fadel said.
So all tariff payers pay higher costs, regardless of whether they have had claims or bills of exchange due to rising costs?
“We’re all putting money in one pot and the hope is that few people have to pull from it,” Fadel said.
Fadel also pointed out that early in the COVID-19 pandemic, 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 people were still wrecking their cars,” he said.
Some were “out of control,” he said.
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“When I got downtown for work, right after I shut down I-670 in Columbus felt like I was driving on a German Autobahn,” Fadel said. “Cars were literally going at 100 miles an hour and just sped past me and that led to increased accident severity. So those costs have gone up a lot.”
Then there were the rising costs related to supply chain issues, he said.
How do Ohio insurance rates compare to what is happening nationally?
Historically, Ohio has one of the lowest average auto insurance premiums in the country, Denhard said. According to the latest available data from the National Association of Insurance Commissioners, Ohio residents paid an average of $802 for auto insurance in 2019 — the 11th lowest in the country. The national average was $1,070.
Should consumers, particularly workers whose workplaces have become more remote or hybrid since the pandemic, contact their insurer to reassess coverage?
Yes, according to Fadel and Denhard. “Most companies consider the kilometers driven as an evaluation factor when calculating the amount of the premium. 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 speak to their insurance agent or company to see if there are opportunities to lower their premium.”
Fadel agreed that people should report any changes in driving, commuting, and where to park their car to their agent.
“This is where the agent plays a valuable role for the consumer,” he said.
Are there possibly similar increases for home insurance?
Yes, said Fadel. Lumber, labor and roofing materials have all increased in price, which means damage replacement costs have also increased.
Is there a remedy in sight or are the costs increasing like everywhere else?
Fadel said he doesn’t have a crystal ball so he doesn’t know what’s going to happen to the economy.
“But I can tell you that we’re one of the most competitive markets, and when companies are able to lower prices, they do it because they want to gain as much market share as possible,” he said.
Any other tips?
Fadel warned consumers against being underinsured.
“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. “Maybe if you save a few hundred dollars, you’re putting yourself at greater risk.
“I just want to warn people to be careful and make sure you’re working with an agent and that they have adequate coverage that suits their individual needs.”
Fadel suggests having your insurance needs reviewed with your agent annually, especially if you’ve modernized or renovated your home.
Denhard said consumers with insurance questions or queries can contact the Ohio Department of Insurance at 800-686-1526, [email protected] and via www.insurance.ohio.gov.
Betty Lin-Fisher, contributor to the Beacon Journal, can be reached at 330-996-3724 or [email protected] Follow her @blinfisherABJ on Twitter or www.facebook.com/BettyLinFisherABJ To see her latest stories and columns go to www.tinyurl.com/bettylinfisher