Illinois Insurance: Auto, Home Premiums Continue To Rise as Allstate, State Farm Rate Hikes

Auto and home insurance premiums in Illinois continue to rise as Allstate and State Farm plans see double-digit rate hikes despite inflation moderating.

This week, Allstate is increasing homeowners insurance rates by 12.7% while State Farm is said to be planning a 12.3% rate hike in May. The supposed plans were outlined in separate state filings by both Illinois-based companies.

Rising Auto and Home Insurance Premiums

(Photo : Scott Olson/Getty Images)
Illinois auto and home insurance premium costs are continuing to rise, prompting the public and advocacy groups to call for regulatory oversight in the sector.

On the other hand, car insurance rates have increased by 28% in the state this year based on the personal finance website Bankrate. An analyst with the firm, Shannon Martin, said that insurance is reactionary, which means that even if inflation is slowing down when losses are experienced, insurance companies pay for them.

She added that the insurance companies in question are trying to recoup some of their losses and adjusting the rates accurately for any future losses. The cost of repairs for both auto and home insurance claims has increased significantly, similar to the number of extreme weather events that have wreaked havoc on various properties, as per the Chicago Tribune.

In an attempt to keep up with claim costs, insurance companies have been aggressively raising rates but it may take a while before easing inflation translates to smaller rate increases for customers. In an email, State Farm spokesperson Sevag Sarkissian said that claim costs are being compounded by inflation and supply chain disruptions.

He added that the situation has resulted in the increased cost of labor and materials, which then translates to higher repair costs. The spokesperson noted that they are continuing to adjust to the new trends to ensure that they are matching price to risk.

Across the United States, auto insurance premiums have risen by 26% this year but rates in Illinois are climbing at a faster rate. Statewide premiums are up by 28% to an average annual cost of $2,310. This is while rates in Chicago have spiked by 34% to an average of $2,532 for 2024.

Proposed Rate Review Process

Over the last two years, auto insurance premiums have risen by nearly $2.4 billion statewide. State Farm has increased rates by $753 million and Allstate has ramped up by $439 million. The numbers were based on a report by Illinois PIRG, which is a non-profit consumer group, according to Yahoo Finance.

At the same time, PIRG is supporting proposed legislation to implement a rate review process for auto insurance in Illinois. This comes as it is one of only two states to not have such oversight in place.

Illinois PIRG director Abe Scarr said in a news release on Wednesday that 2023 should be the last year that car insurance companies can raise rates by so much without scrutiny from the public and regulators.

Amid the situation, there have been political developments in Springfield, with proposed bills that seek to grant state regulatory bodies a greater say in the approval of insurance rate changes as well as to urge insurers to disclose their underwriting results in Illinois.

However, despite legislative efforts, there has been pushback from the insurance industry that has resulted in stalled progress. With rising demand for rate review as Illinois residents struggle with rising costs, consumer advocacy groups have also intensified calls for enhanced transparency and regulatory oversight in the sector, said Hoodline.