Benefits of Insurance

When people think about insurance, they probably think about  the last insurance premium they paid, the auto accident they had  last year or the trip last month to the emergency room. This is  what's expected. In 1997, 6.5% of American household  expenditures were allotted to insurance needs.

A universal complaint heard by auto insurance companies is,  "My insurance rates have increased even though I haven't had an  accident!" Why does this occur? Because individuals don't have  a clear understanding of how insurance works. A common  misconception about insurance is that it works like a savings  account. An individual continues to pay premiums year after  year, thinking that premium payments are placed in an "account"  to pay for future incurred losses. This is not the way insurance  works.

 In simplest terms, insurance is a concept where "many people  share the losses of the comparatively few." This concept does  not necessarily provide comfort until you become "one of the  few." The purpose of insurance is to help pay for losses that  ordinarily you wouldn't be able to afford on your own. Without  insurance, few people could afford the risk of owning a home or  car. Lenders could not afford the risk of making loans for a new  business venture or factory construction. And medical assistance  or surgery would not be an option for many without the benefits  insurance provides.

Ohio is a leading insurance state with 297 insurance companies domiciled in the state. In fact, Ohio ranks 10th in the US based  on the number of property/casualty insurance companies domiciled within the state with 125. As a part of the financial  services sector, Ohio's insurance industry provides stable  employment to more than 90,958, not including the thousands of  self-employed agents.

 Insurance is just one of the factors that enables individuals to make  long-term commitments and secure a better future. In 1998  insurance played a role in:

•  20,251 new businesses that were formed, creating new job markets
•  $7.7 billion in wages earned by Ohio's 229,397 construction industry employees
•  The sale of 398,502 cars and 329,392 trucks
•  Protecting the majority of Ohio's 7.8 million licensed drivers by providing auto insurance through  a  strong competitive market
•  $3.88 billion paid to Buckeye residents employed by the state's insurance industry
•  Providing protection to Ohio's 4,630 schools, along with enabling the construction and  renovation of new and existing school buildings and
•  Supporting a $114.8 billion Ohio retail sales industry.


Individual purchase insurance to protect their assets and as a  means of financial security. The insurance industry covered  personal losses well into the billions of dollars in 1998 including:
 

•  Nearly $7.9 billion in property, automobile, medical and  other property/casualty insurance losses. These losses include $3.1 billion for personal and commercial automobile accident losses, $622 million in direct losses paid for homeowners insurance policyholder losses and  $2.6 million in losses related to accident and health and
• $4.7 billion distributed to the beneficiaries of accident and  health insurance policies in private companies.

The Ohio Department of Insurance is the largest consumer  protection agency in the state and sole regulator of Ohio's  insurance industry. The department ensures the financial stability  of insurers through ongoing reviews, audits and policy making.

Additionally, the department regulates insurance company  rate setting and compliance standards. The Ohio Department of  Insurance preserves Ohio's healthy insurance climate as well as  protects the interests of millions of policyholders.

 Property/casualty insurers guarantee the solvency of Ohio  companies through the Ohio Insurance Guaranty Association,  which is supported by the industry. When an insurance company  is declared insolvent all companies operating in the state are  assessed on the basis of their share of the statewide insurance  market. These funds are used to pay the covered claims and  unearned premiums of the insolvent company.