Why are the state's auto insurance rates rising?

A Beacon Journal colleague recently lamented that his six-month car insurance premium was going up by 17%, even though he had no claims, tickets or other changes to his family's driving patterns.

His insurance agent said car insurance rates were going up statewide.

So I contacted both Dean Fadel, president of the Ohio Insurance Institute, the trade group for the state's property and casualty insurance carriers and Robert Denhard, spokesman for the Ohio Department of Insurance to find out what was going on.

Have there been auto rate increases in Ohio?

Yes, according to the Ohio Department of Insurance. After two years of auto insurance average rate decreases in 2019 and 2020, there was a 2.7% average rate increase in 2021, said Denhard. This is per data from the state's 10-largest insurance groups, which comprise 80% of the market, he said.

Denhard provided data for 10 years through 2021 (2022 data is not yet available). Average rates were up anywhere from a low of .5% (2018) to a high of 3.5% ( 2017) before a drop of -1.7% in 2019, -3.7% in 2020 and then increase of 2.7% in 2021.

Different factors can impact auto insurance rates, including driving behavior, driving infractions, amount of driving, vehicle type, claims activity, repair and materials costs and medical costs, said Denhard.

Fadel said insurance rates are "driven by the economy. When you look at what it costs to replace a vehicle now (with supply chain issues and price increases) versus what it may have cost two years ago or even last year, it's a lot more.

"Say your car gets wrecked and you need a rental car. To rent a car is going to be for a lot longer because it's going to take longer to replace or repair your car. Parts are more expensive, too. Autos just in general are more expensive," Fadel said. "If your car is totaled, it's going to cost a little bit more than it did even a couple years ago to put you into a new car. "

There are standards in rate-making that have to be approved by the Ohio Department of Insurance for each company, Fadel said.

So all ratepayers pay higher costs, regardless of whether they have had claims or changes because of rising costs?

"We're all putting money in a pot and the hope is that only a few people have to draw out of that," 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 while there was less driving, it didn't necessarily translate into lower costs for claims because what was happening was people were still wrecking their cars," he said.

Some were "driving out of control," he said.

"In my commute when I was coming downtown, right after things shut down, I felt like I-670 in Columbus was like I was driving the German Autobahn," said Fadel. "Literally cars were going 100 mile an hour just zooming past me and what that translated to is increased severity of the crashes. So those costs went way up."

Then the rising costs associated with supply-chain issues were added, he said.

How are Ohio's insurance rates compared to what's happening nationally?

Historically, Ohio has one of the lowest average auto insurance premiums in the country, said Denhard. Ohioans paid an average of $802 — 11th lowest in the nation — for auto insurance in 2019, according to the most recent data available from the National Association of Insurance Commissioners. The national average was $1,070.

Should consumers, especially workers whose jobs have become more remote or hybrid since the pandemic, contact their insurer to re-evaluate coverage?

Yes, according to Fadel and Denhard.

"While driving activity has increased for many people, some people may have changed their driving frequency," said Denhard. "Most companies consider miles driven as a rating 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 significantly changed, they should speak to their insurance agent or company to see if options exist to lower their premium amount."

Fadel agreed people should be communicating any changes in driving, commuting and where they park their car to their agent.

"That's where the agent plays a valuable role for the consumer," he said.

Are there potentially similar increases for home insurance?

Yes, said Fadel. Lumber, labor and roofing supplies have all gone up in price, which means replacement costs for damages also have increased.

Is there is there any relief in sight or is it like everything else, costs are increasing?

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 because they want to get as much market share as they can," he said.

Any other tips?

Fadel cautioned consumers from being underinsured.

"Insurance to a certain degree is like anything else; you get what you pay for. So make sure you look at your coverage and you understand the scope of your coverage," he said. "You might be putting yourself more at risk by saving a couple hundred dollars.

"I would just caution people to be careful and to make sure that they work with an agent and that they have adequate coverage that meets their individual needs."

Fadel suggested a check-up yearly with your agent on your auto and homeowner's insurance needs, especially if you've done any type of upgrades or renovations to your house.

Denhard said consumers with any insurance issues or questions can contact the Ohio Department of Insurance at 800-686-1526, consumer.services@insurance.ohio.gov, and through www.insurance.ohio.gov.

Beacon Journal staff reporter Betty Lin-Fisher can be reached at 330-996-3724 or blinfisher@thebeaconjournal.com. Follow her @blinfisherABJ on Twitter or www.facebook.com/BettyLinFisherABJ To see her most recent stories and columns, go to www.tinyurl.com/bettylinfisher

Betty Lin-Fisher

Consumer Columnist

Akron Beacon Journal

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