State Farm raising Illinois auto insurance rates more than 8%

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This latest increase will hike the average annual premium by nearly $70, or almost $6 per month, according to a filing with the Illinois Department of Insurance.

State Farm’s three increases combined this year total more than 16% and will have raised premiums for roughly a third of drivers in the state by an average of about $127 annually. The latest increase takes effect Sept. 13.

A State Farm spokeswoman had no immediate comment.

Northbrook-based Allstate, the second-largest auto insurer in Illinois after State Farm, recently filed to average hike rates of 16%. Two double-digit Allstate increases this year add up to nearly 30%, or $520 annually.

Want to save money with Geico, as the Chevy Chase, Md.-based company so frequently advertises? It will be a lot more difficult after Geico’s 17% average rate hike takes effect Aug. 19. Multiple increases by Geico within the past year will have jacked up policyholders’ premiums by an average of about $470 annually. Geico is the fourth-largest insurer of Illinois drivers.

Auto insurers are struggling to keep up with the costs of settling claims. A steep rise in used-car prices is the primary cause.

But the pace of the rate hikes has state regulators pushing back. The Illinois Department of Insurance in a letter asked State Farm to justify the latest increase with detailed data.

State Farm responded but made clear it thought regulators were overstepping their bounds.

“In the spirit of cooperation, State Farm is willingly providing the requested information outside of the department’s review under more specific legal authority granted in the Illinois Insurance Code, but does not waive any future right to maintain or argue that the department has limited authority to : (1) require confidential, trade secret or privileged information related to rating and/or (2) require insurers to create information/documents not already available to be filed with a rate filing, or otherwise file information outside of the items required to be included
with a rate filing under the above cited regulation,” the company wrote July 28.

State lawmakers are pushing for legislation to give regulators more authority to demand information from insurers on their profits from drivers and to make it public. Unlike most other states, Illinois regulators have virtually no authority over insurers’ rates.

With State Farm and Allstate headquartered in Illinois, efforts in the past to give regulators more power over pricing have gone nowhere.

State Farm’s latest increase will more than erase the 14% rate cut the company gave policyholders in 2020 as the COVID-19 pandemic took hold and driving levels plummeted. That rate cut—far deeper than other major auto insurers provided—has strengthened State Farm’s already-commanding position in the Illinois market.

Since mid-2020, State Farm’s number of auto policies in the state has risen 6%—to just over 3 million, according to the filing. Over the same period, auto policy numbers from Geico and Ohio-based Progressive have fallen. Both Geico and Progressive for years leading up to the pandemic had gained market share in Illinois at the expense of Allstate and State Farm, among others.

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