Ohioans have long enjoyed low insurance costs despite a dearth of large-scale natural disasters such as earthquakes and hurricanes that drive rate increases.
But the increasing frequency — and severity — of storms like the one that tore through Beavercreek and tossed cars on their sides last week is putting more pressure on insurers to raise premiums.
“What we’re seeing in recent times is that the frequency and severity of these catastrophic events has really picked up,” said Mary Bonelli, spokeswoman for the Ohio Insurance Institute. “How this reflects on future premiums is that insurers need to make sure that the cost of coverage is adequate to cover their losses going forward.”
Officials say it could take up to six months before they have a preliminary estimate of storm-related damages in Beavercreek, in part, because many residents have not reported claims to their insurance companies, and insurance adjusters may not have conducted damage assessments.
Still, the Beavercreek tornado is unlikely to cross the $25 million threshold necessary to qualify as a catastrophe, Bonelli said.
“The insured losses may not necessarily be that significant…because most were in a localized area,” she said. “It’s hard to say at this point whether damages will reach the $25 million threshold.”
While Ohio may have been spared the most serious damage, the tornado that touched down Tuesday near The Greene Town Center was among a series of storms ranging from south-central Texas into southeastern Kansas that resulted in several tornadoes, high winds and major flooding.
And it’s widely believed that insurance losses from the nine states involved will reach $25 million or higher, Bonelli said, noting that Property Claim Services is in the process of conducting an insured loss assessment for the storms that lasted from May 23-27.
Such assessments are becoming increasingly common for PCS, a national firm that tracks insured property losses from catastrophes in the United States and other countries.
Top storms in Ohio
OII data shows the number of catastrophic events prompting losses of $25 million or more over the past four years exceeded the number reported for the previous 10 years in Ohio.
In fact, six out of the seven costliest years for catastrophes in Ohio have occurred since 2008, including high winds, tornadoes and hailstorms reported in various regions of the state that caused an estimated $1.05 billion in losses from May 20-27, 2011, according to PCS.
It was the Ohio’s third-costliest catastrophe in inflation-adjusted dollars, ranking just behind the 1974 Xenia tornado in April 1974, which caused $1.1 billion in damage.
The costliest year for Ohio insured losses remains 2008, when claims of nearly $1.4 billion were made, most of them connected to wind damage caused by Hurricane Ike.
The Beavercreek tornado that hit Tuesday was the 164th recorded in Ohio since 2010, according to figures from the National Weather Service.
That’s just one shy of the total number of tornadoes recorded in Ohio through the 1980s, and just 10 shy of the total number of tornadoes recorded from 2000 through 2009.
A total of 199 tornadoes were recorded in Ohio in the 1990s.
Still, experts caution against reading too much into the numbers, noting that many significant storms may not have been included in the historical record because they simply weren’t witnessed and recorded.
Advances in technology and the prevalence of cell phones and other recording devices now make it much easier to document and track storms, but that doesn’t necessarily mean there has been an increase in sever weather events, said StormCenter 7 Meteorologist Carrieann Marit.
“There are more thorough records of events in recent years than ever before,” Marit said. “I would say that the prevalence of storms has more to do with sociology and less to do with climatology.”
Insurance rates low
In general, Ohio continues to benefit from a dearth of large-scale natural disasters, such as earthquakes, hurricanes, floods, which typically drive up insurance rates.
In addition, the state has more insurance carriers than many of the more expensive states, which drives competition and keeps rates relatively stable.
OII estimated that Ohio’s average homeowner’s insurance premium would rise $29 to $830 this year, up slightly from the $27 increase projected for 2014, but lower than the $53 increase in 2013.
By comparison, average homeowners’ rates are projected to rise $39 to $1,152, nationwide.
Even with increases predicted this year, Ohio residents pay some of the most affordable rates for homeowner’s and auto insurance in the United States, the Ohio Department of Insurance announced earlier this month.
Ohio ranked No. 9 among all states with an average homeowner’s insurance rate of $725 a year and No. 11 for auto insurance with an average annual rate of $635, according to 2012 data from the National Association of Insurance Commissioners — the most recent figures available.
By comparison, the national average annual premium for homeowner’s insurance was $1,023 and $815 for auto insurance, according to the NAIC. When combined, the state’s homeowner’s and auto insurance premiums were nearly $500 below national averages.
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