State Farm has finalized a $182 million auto policy rate hike in Illinois that is drawing fire from a nonprofit watchdog group.
The Illinois Public Interest Research Group (PIRG) said in a statement the increase adds $58 to the average customer's annual bill. PIRG said rate hikes last year, added to the one that took effect Friday, mean a total increase of $500 million to State Farm customers in the last 12 months.
Allstate also raised rates by $63 million in January and by $292 million since the start of 2022.
Illinois is one of just two states that does not have state oversight and limits on rate increases. The group and several other organizations are backing legislation HB2203, that gives more authority to the state Department of Insurance.
“In just the first two months of 2023, two companies alone have raised car insurance rates by almost a quarter of a billion dollars,” said Illinois PIRG Director Abe Scarr. “It’s time to empower the Department of Insurance to reject or modify unfair or excessive car insurance rate hikes.”
The Illinois PIRG Education Fund and Consumer Federation of America said combined, top car insurance companies raised Illinois driver rates by more than $1.1 billion in 2022.
“Because insurance companies use non-driving factors to set rates, massive car insurance rate hikes have a disproportionate impact on communities like those I represent,” said state Sen. Javier Cervantes, D-Chicago, one of the sponsors of the measure.
Earlier this week, State Farm pointed to large increases in claim costs when it announced record losses last year of more than $13 billion in its property and casualty insurance lines. The losses came from increased payouts driven in part by inflation. State Farm's net loss for the year was $6.7 billion.
Insurance industry analyst Jeff Rieder of Ward Benchmarking Services noted in early February that in many states, insurers have not been able to raise rates enough to offset cost increases because of regulators.
