After years of steady rate hikes, Ohio drivers are finally getting a break on the price of auto insurance.
Rates rose just 0.5% among the state’s biggest 10 carriers in 2018, according to Ohio Department of Insurance data released last week. That’s the smallest increase since 2007, when rates among those carriers actually fell 3.2%.
The top 10 carriers represent 77.5% of the Ohio market.
The leveling off of rates in Ohio after years of steady increases is consistent with what’s happening in the rest of the country, said James Lynch, chief actuary for the Insurance Information Institute, an industry group.
“If you go back a few years, there was a big increase in accident rates and more costly accidents. Insurers, when those costs go up, their solution is to raise rates,” Lynch said.
Claim frequency has started to shrink in the past couple of years, he said. The cost of accidents continues to go up, but the reduction in accidents is helping to mitigate that, he added.
“Insurers are much less likely to seek a rate increase. It’s harder to justify and (it) puts them at a competitive disadvantage,” he said.
The biggest auto insurer in the state, State Farm, which has 18.7% of the Ohio market, cut rates by 4.8% in 2018 after raising them 9.8% in 2017.
Columbus-based Nationwide, the fifth biggest auto insurer with 7.2% of the state market, raised its rates 9% last year, the most of any of the big carriers. That was on top of a 4.1% increase in 2017, according to the state data.
Nationwide blamed the 2018 increases on a combination of factors.
“More people driving resulted in more accidents. In addition, auto insurance rates are pressured by higher repair costs and higher medical costs. We also know that distracted driving is a major contributor to automobile accidents everywhere and impacts the price of insurance coverage,” the company said in a statement.
This year will be a different story, with 97% of policyholders either getting a rate cut or having rates remain the same, the company said.
Nationwide credits improved financial results this year along with new programs designed to make coverage more affordable based on driving behavior and how much motorists drive.
The company plans to introduce a new program in Ohio next year called SmartMiles, which will allow drivers to pay as they go.
Grange, also based in Columbus, raised its rates 6.5% last year on top of a 3.6% increase in 2017. The company declined to talk about the increase.
The fact that companies adjust rates differently indicates a competitive marketplace, Lynch said.
“They won’t all take rate increases in lockstep. All individual companies all faced with individual situations will make their way forward in the marketplace,” he said.
Homeowner rates, meanwhile, were flat last year among the biggest 10 companies.
That was the second year in a row of flat rates and the third time it has happened in the past four years. Rates rose 1.5% in 2016.
From 2009 through 2014, rates increased by at least 3.4%. In one year, rates went up 11.7% during a period when the state was hit with a series of powerful storms that damaged roofs and siding.
While insurers can’t raise rates to recover costs associated with a particular storm, those storms can be used as projections for future rates.
State Farm, also the state’s largest home insurer, cut rates 3.4%. Cincinnati Financial Group raised rates 5.2%, the most of any of the big carriers.
All in all, the state says auto and home rates in Ohio remain among the lowest in the country.
The average homeowner pays $850 a year in homeowner’s insurance, the ninth lowest rate in the country, and $727 for auto insurance, the 14th lowest, according to the most recent data from the National Association of Insurance Commissioners.
Combined, average premiums for home and auto insurance are $551 below the national average.