The head of Illinois’ insurance industry trade group said Tuesday that Gov. JB Pritzker’s attacks on State Farm were “unfortunate” and likely part of a push to give state regulators new power to reject rate increases.
Kevin Martin has led the Illinois Insurance Association [IIA] for 31 years. During that time, he said he’s never seen a governor publicly go after a single insurer over a rate hike in the way Pritzker has.
“It’s unfortunate. I kind of wish that the governor or his staff would’ve reached out to have that conversation directly with State Farm before issuing a public statement like that, because I don’t think it does anybody any good,” said Martin, the IIA’s executive director.
The dispute spilled into view last week when Pritzker issued a statement critical of State Farm’s 27% homeowners’ insurance rate increase. He called the rate increase “unfair and arbitrary.” Pritzker said an analysis by his administration suggests “State Farm is shifting out-of-state costs onto the homeowners in our state.”
Bloomington-based State Farm denies that, saying that inflationary pressures and severe weather are really to blame. It says the governor’s claims are “factually incorrect” and “political rhetoric.”
Others in the business community have taken notice too. In a statement to WGLT, the Illinois Chamber of Commerce said it “respectfully disagrees” with Pritzker’s remarks about State Farm, which it called “a company that has been a trusted insurer for Illinois families and a vital contributor to our state’s economy by supporting tens of thousands of jobs for over a century.”
“Recent increases in insurance rates reflect broader national trends, including more frequent extreme weather events, rising claims, and increased costs for labor and materials. These challenges are complex and not unique to the state of Illinois,” the Illinois Chamber said. “Attributing these changes to out-of-state claims misrepresents the issue and risks distracting from meaningful solutions. We believe that constructive dialogue should focus on addressing cost drivers within the state's control, such as regulatory mandates that impact affordability for businesses and consumers alike.”
State Farm has been losing money on its homeowners’ line of business for years. When asked why there’s now a 27% rate hike, Martin said you also need to look at the bigger picture. Illinois had the most tornadoes of any state in 2023, more than tripling its number of tornadoes from the previous year. State Farm says Illinois had more hail damage claims than any other state except Texas in 2024.
“It’s a terrible culmination of the effects of inflation and the cost of materials to repair damage when catastrophes come through, and it’s the disasters,” Martin said. “When you add all of that up, it’s something that’s going to be reflected in the claims costs, and that’s what drives the rate.”
Regulatory changes coming?
In his statement, Pritzker called on state lawmakers to “enact a legislative solution” during the fall veto session that “prevents insurance companies from taking advantage of consumers through severe and unnecessary rate hikes like those proposed by State Farm.”
Martin said that appears to be Pritzker pushing for “prior approval,” or rate review, giving the Department of Insurance the power to reject rate hikes deemed to be excessive or discriminatory. Currently, the Department of Insurance gets notified of a rate hike but can’t stop it. Regulators in other states can do that. Consumer groups have advocated for the change in Illinois.
“There are consequences when you go down that path,” Martin said. “It will increase costs associated with companies having to spend additional time, money, resources to work with the Department [of Insurance] to get their rate approved in a timely manner.”
If the regulatory burden becomes too great, Martin said, some insurers may simply choose not to do business in Illinois, as they’ve done in places like Florida and California, hurting competition.
“Companies don’t need to write insurance in every state,” he said.
Martin said he’s hoping the Pritzker administration will be willing to talk with the insurance industry on whatever proposals emerge for veto session.
“We’ve never been reluctant to have those conversations, and we want to have them. We want to have the ability to discuss what’s going on and what’s driving these increased claims costs,” he said.
