Ohio Uninsured/Underinsured Motorist Coverage Market Reportedly Stabilizing

After several years of uncertainty and rising premiums in the commercial auto market for uninsured and underinsured motorist (UM/UIM) coverage in Ohio, the Ohio Department of Insurance is reporting that the market is stabilizing, according to Director Ann Womer Benjamin announced.

The Department issued its status report required by Senate Bill 97 (S.B. 97), which two years ago amended Section 3937.18 of the Ohio Revised Code to remedy problems with the UM/UIM coverage market.

“Today, Ohio’s market for UM/UIM coverage is competitive in terms of availability and affordability,” said Womer Benjamin. “Insurers continue to offer coverage even though they are not required to do so, and the rates are coming down.”

According to Womer Benjamin, the passage of S.B. 97, which became effective Oct. 31, 2001, calmed the commercial auto market, which experienced significant disruptions after two UM/UIM Ohio Supreme Court rulings. Subsequent to these rulings, some insurance agents advised the Department that they were having problems finding an insurance company that would write new commercial auto coverage in the state. Senate Bill 97 eliminated the requirement that commercial auto insurers offer UM/UIM coverage in Ohio.

In 1999, the Ohio Supreme Court decision Scott-Pontzer v. Liberty Mutual, which extended commercial auto coverage to employees when they are not at work, greatly increased the exposure on commercial auto insurance policies and contributed to strong price increases and further changes in policy wording for UM/UIM coverage. Additionally, the 2000 Supreme Court decision in Linko v. Indemnity effectively caused commercial insurers to extend UM/UIM coverage, at the newly increased level of exposure, to every commercial auto insurance policy in Ohio at no additional premium.

With these decisions, the market reportedly significantly tightened and premiums spiraled upward. In fact, eight of the top 10 commercial insurers in Ohio implemented substantial rate increases for the UM/UIM coverage, some exceeding 100 percent, following Scott-Pontzer and Linko. Four of the eight have reduced their rates by 50 percent or more after the implementation of S.B. 97.

The Department’s report is prepared as of Oct. 31, 2003 and does not reflect the Ohio Supreme Court’s recent reversal of its Scott-Pontzer decision.

In the new case, the Court ruled that an employer’s commercial automobile insurance policy only covers injured employees and only if the accident happens in the course and scope of their employment. Hundreds of UM/UIM cases dating back as far as 15 years are expected to be dismissed.

Automobile insurance generally consists of coverage for the policyholder’s liability to others and for damage to the policyholder’s vehicle. UM/UIM coverage pays the policyholder when another person is liable for damages to the policyholder. There are more than 200 companies writing auto insurance policies in Ohio.