The cost of insuring a car in Ohio is skyrocketing with the state’s biggest insurers posting increases that are the largest in at least a decade.
Several of the state’s biggest carriers raised rates by more than 10% in 2022 with some even approaching 20%, according to Ohio Department of Insurance data.
Federal government inflation data show no sign of auto insurance inflation abating this year. Government inflation data for September show rates for auto insurance have gone up 18.9% over the past year.
“We’ve really never seen anything like this,” said Dean Fadel, president and CEO of the Ohio Insurance Institute, an industry group.
Geico, the insurer with the fourth biggest share of Ohio’s auto insurance market, raised rates by 19.5% last year, according to Ohio Department of Insurance data. That was the most of the state’s big carriers.
American Family Insurance increased rates by 17.5% and rates for Columbus-based Nationwide, which also has a big financial services operation, swelled 17.4%, the state figures show.
Progressive, the biggest carrier in the state with 17.5% of the market, increased rates 10.8% in 2022.
There was one exception among the big carriers to the higher rates: Erie, which raised rates a miniscule 0.2% last year. Over the prior four years, Erie kept raises flat three times and cut them once 3.6%.
All in all, the 10 biggest carriers in Ohio, which control 81.2% of the state’s market, increased rates 11.4%.
That’s the biggest increase in data going back to 2012. The second biggest increase over that period was 3.6% in 2017.
The good news, if there is any, is that rates for Ohio drivers continue to remain well below national average.
Ohio drivers pay an average of $1,266 per year for full coverage and $338 per year for minimum coverage, according to Bankrate.com. In the U.S., the average cost of car insurance is $622 per year for minimum coverage and $2,014 per year for full coverage.
“Relatively speaking, we’re still one of the most reasonable states in the country,” Fadel said.
What’s driving higher costs?
A better question may be what isn’t causing rates to go up.
Usually, these kinds of spikes can be pinned on one or two things, but this one is different, said Fadel, of the Ohio Insurance Institute.
“This has been interesting because it’s a number of different factors that have piled on all the same time,’’ he said.
More accidents, drivers going faster, higher prices for new and used vehicles, slower repair times, more difficulty getting spare parts and higher labor costs are among the factors that have contributed to rising rates.
The cost of motor vehicle maintenance and repair, for example, has climbed 10.2% over the past year, according to government inflation data.
Also a problem is the rise of stolen vehicles, in particular thefts and attempted thefts of Kia and Hyundai vehicles.
One consumer group blames another factor: corporate greed.
“The spiking of insurance premiums is far outpacing inflation. And these rate increases come on the heels of massive insurer windfalls during the COVID-19 pandemic, where they got massive profits,” said Michael DeLong of the Consumer Federation of America. “When times were tough only for consumers, insurers kept most of the money for themselves and gave their CEOs and senior executives and stockholders big rewards. And now that times are tough for insurers, they claim they need to raise rates.”
What about homeowner insurance rates?
The big 10 carriers in Ohio raised homeowner rates 3.8% last year, more modest than auto rates, but still the biggest increase since 2018.
American Family posted the biggest increase, 14.3%, and Nationwide raised rates 10.1%.
“Like the rest of the industry, we are responding to weather volatility, record levels of inflation, and increased repair and replacement costs that continue to impact the auto and home repair industries,” Nationwide said in a statement. “We are taking the necessary actions that ensure long-term viability and allow us to offer protection at a competitive price to customers across all our business lines who represent many types of needs. We encourage consumers to work with an independent agent to help them get the best coverage at the best price.”
Other insurers including Geico and American Family did not respond to requests seeking comment.
Natural disasters cause insurers to change up coverage
While it has not been much of an issue in Ohio in recent years, extreme weather exacerbated by climate change has led some of the big insurers, including Nationwide, to change coverage in other parts of the country.
Nationwide and other large U.S. property insurers — including Allstate, American Family, Erie Insurance Group and Berkshire Hathaway — have told regulators that extreme weather patterns caused by climate change have led them to stop writing coverages in some regions, exclude protections from various weather events and raise monthly premiums and deductibles, The Washington Post reported in September.
Insurance providers are more willing to drop existing policies in some locations that become more vulnerable to natural disasters, the Post reported.
Nationwide has acknowledged that it is demanding more information from potential customers before it will return a quote for new auto, property and powersports applications.
“This process ensures we have an opportunity to review potential new business prior to providing a quote and offering coverage,” the company said. “It will affect existing customers in situations where they are looking for a new policy, and the changes do apply in Ohio.
“We’re committed to long-term profitable growth to support the protection needs of our partners and members. Nationwide started this year in a position of strength, having just closed out two of our best years in company history and continue to maintain AAA capital.”
What you can do to save money on your insurance bills
With bills soaring, homeowners and drivers have options to try and keep premiums manageable.
Shopping around, increasing deductibles and deploying smart home devices can reduce premiums.
Bundling home and auto policies with the same insurer can reduce costs by as much as 20%, according to various estimates.
With auto policies, drivers who switch to policies that cover insurance by the mile or track how well drivers handle themselves on the road can reduce policy costs.
Otherwise, drivers should focus on factors that influence rates such as having a good driving record and credit score.
@BizMarkWilliams