March Madness in the Ohio Auto Insurance Industry

​Ohio auto insurance companies are having their own version of March madness! While this is a fun and exciting time to watch college basketball, things aren't so pleasant when auto insurance companies don't do well. 2016 wasn't a good year for the auto insurance industry. While some companies did do very well, other companies lost a lot of money. As a result a lot of the companies that lost money (or made very little) are making drastic adjustments.


Some of these adjustments include:

• changing payment plans (which means higher down payments and/or requiring automatic payments)
• suspending new business in certain areas 
• some companies have stopped doing new business altogether in Ohio
• tougher underwriting standards
• And, of course, raising premiums!

   This article will help you understand why some auto insurance companies are in the poor shape they are in. Understanding why this is happening helps you to keep an overall pulse on the auto insurance industry. This article will also help those of you who have already felt the negative impact of this downturn, and give you some ideas of how to minimize the effects.


Of course, only a small percentage of auto insurance companies lost money. A small percentage did very well. In between is the bulk of companies that did ok, but didn't make the profits they expected to make. It's the companies that had poor to mediocre results that are raising premiums.




Major reasons why some Ohio auto insurance companies had a bad year

• Competition. If you take the number of auto insurance companies in each state and divide it by that state's population, Ohio ranks #1 for having the most companies per capita. This higher amount of competition, which helps keep premiums low.

• Race to the bottom. When you combine the competition factor with the fact that Ohio has fairly minimal requirements, premiums tend to run very low compared to most states (many states require medical payments coverage and uninsured motorist coverage. Ohio requires neither). For an auto insurance company to gain significant market share, they need to offer low prices to be competitive with all the other companies.... Sometimes, they set the premium floor too low and lose money.

• Increasing cost of claims. Newer vehicles are coming out with safety features such as sensors, cameras etc. that are great for overall safety, but very expensive to repair compared to older model vehicles. And year after year health care costs go up and up and up.  This includes people with minor injuries and people with severe of life threatening injuries.

 Having lower costs in premium combined with higher costs in claims causes problems for many companies. Something's gotta give! This is why prices are going up.

 What to do if your auto insurance premium goes up


    If you get bit by the higher premium bug, the best thing you can do for yourself is shop around with other auto insurance companies. I can not stress that enough! Comparing quotes from other insurance companies is your single best way of keeping auto insurance premiums down. It is recommended that people should shop around for insurance at least once every two years. But statistics show that only a small percentage of people follow that advice. Some people go years without getting a quote from other companies. Oddly enough, those are the same people who tend to be offered the highest amount of savings when and if they do finally shop around.


Key tips about how to shop around for a lower auto insurance price


Whether you prefer to get an auto insurance quote online or over the phone really doesn't matter. What matters is WHO you are getting the quotes from:

• I recommend staying away from getting quotes directly through a company. When you do that, those companies tend to either bypass their agents, or not use agents at all. So when something bad happens, do you want to talk to an agent for advice or get advice from a customer service rep that's trained to give you only company preferred responses? Some of the lousiest advice I've heard people receive is about how to handle a potential claim from a customer service rep. Do your self a favor and go through an agent. They will give you sound advice rather than a canned company response that serves the company's best interest.

• Beware of lead generation sites! A lead generation site looks very much like an insurance agency's website. If you don't know what to look for, it can be hard to tell the difference between an insurance agency and a lead generation site. A lead generation site pretends to sell insurance, but they don't sell insurance at all.  Instead, they collect your information that is needed to run an auto insurance quote, and then sell your information to real insurance agents. The big problem with that is that they often sell your info to dozens of agents, which causes your phone to ring off the hook! Stay away from those sites..... Fortunately, there's a very easy way to spot these shady lead sellers. They try to stay anonymous and do not list important details on their website, such as name, address and phone number. Any agent or agency worth their salt will display those kind of things prominently on their website. If you do not see a real live person on the other end, beware!

• Independent agent versus captive agent. My opinion is obviously biased here since I'm an independent agent. I have nothing against captive agents and most all of them are great at doing their job.... But getting a quote with independent agents (agents who sell insurance with multiple companies) is much more efficient than getting quotes with captive agents (agents who are employed by and only sell through one company). For example: If you call or quote online with three captive agents, you will only get quotes from 3 companies.... However, if you call or quote online with three independent agents, you may get quotes from 20-30 (or more) companies with less than one hour's worth of effort. Independent agents will do the work of shopping around for you as opposed to a captive agent, whose hands are tied down to one company.

Summary: The auto insurance industry is no different than the stock market. There are periods of good and bad. But this is nothing to worry about in the long run. Like a bear market with stocks, you simply need to make adjustments in order to ride the storm out. So don't be afraid to shop around for other auto insurance. Chances are more often than not that you will save money by doing so.



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