The Insurance Industry in Ohio

In March 2010, Ernst & Young LLP issued a report detailing the results of a study of the impact of the insurance industry in Ohio commissioned by the Association of Ohio Life Insurance Companies and the Ohio Insurance Institute.

Some highlights of Ernst & Young’s findings include:

• The insurance industry is a major contributor to Ohio’s economy and employment, and is a significant source of tax revenue to Ohio’s state and local governments. Components of the insurance industry operating in Ohio include: insurance companies, insurance agencies, and other insurance related service companies.
• Insurance companies, insurance agencies and other insurance related activities employed nearly 110,000 Ohio workers in 2007, accounting for 2.3 percent of employment in the state. Insurance companies employed 75,000 (68 percent) of the 110,000 insurance industry employees in the state. Insurance agencies and related service companies employ the remaining 35,000 (32 percent).
• The insurance industry paid $6.5 billion in total payroll to Ohio employees in 2007, which was 3.6 percent of the total private-sector payroll. Of this amount, insurance companies paid $4.8 billion, and agencies and related services companies paid $1.6 billion. The average annual salary for an Ohioan working in the insurance industry was $59,042 in 2007, 56 percent above the Ohio average.
• The effective total state and local business tax rate on the Ohio insurance industry, including all state and local taxes, was 5.6 percent in fiscal year 2008, exceeding the 4.2 percent average tax rate for all other Ohio industries and the 2.4 percent paid by the broader services sector. Insurance premium taxes account for 66 percent of the total taxes paid by the insurance industry in Ohio.
• Premium taxes paid by insurance companies to the state of Ohio increased by 23 percent from fiscal year 1998 to 2008. This increase occurred despite legislation enacted in 1996, which phased down the premium tax from 2.5 percent to 1.4 percent during this period.
• Since 1997, a net of 10 insurance companies and $2.7 billion in assets have relocated to Ohio.

Source: Ohio Insurance Institute. The Ernst & Young study, “Economic and Fiscal Contributions of the Ohio Insurance Industry,” can be found online at the Ohio Insurance Institute Web site, http://www.ohioinsurance.org/.