Allstate raised auto insurance rates in Illinois by 14% last month, significantly outpacing the national average and the rate of inflation. State Farm was not far behind, raising rates more than 8% for Illinois drivers in August.
Allstate’s premium increase, announced Thursday, averaged about 3.2% in the United States, according to the Northbrook-based insurer.
For the year, Allstate raised auto insurance rates by 26% for Illinois drivers, well above the national average of about 10%, spokeswoman Mallory Vasquez said in an e -mail. With the consumer price index up 8.3% through August, inflation alone does not explain Allstate’s sharp rate hikes in Illinois and other states.
“We assess crash frequency and severity at the state level,” Vasquez said. “Beyond inflation, some of the factors driving losses in Illinois are the same as those affecting the rest of the country: Miles driven are back to pre-pandemic levels, vehicle collisions are more serious, driving speed, distracted driving. Illinois is one of the top states for vehicle theft. »
Other states that saw above-average rate hikes per Allstate in August include New Mexico, Texas, Massachusetts, New Hampshire, Oregon, Arizona, Pennsylvania and Florida, the company said.
State Farm, Allstate and Progressive — Illinois’ three largest auto insurers — have all filed for rate increases with the state Department of Insurance this year, a dramatic change from the rebates and rate reductions that proliferated during the pandemic lockdown in 2020.
Bloomington-based State Farm, the state’s largest auto insurer, raised Illinois insurance rates 8.4% last month, following a 3% increase in June. In March, State Farm implemented a 4.8% rate hike for Illinois drivers.
In 2020, State Farm reduced auto insurance rates in the state by 13.7% as many drivers parked their cars early in the COVID-19 pandemic. In February 2021, State Farm reversed course, raising rates by 4.2% and taking a “measured approach” to rate increases, State Farm spokeswoman Gina Morss-Fischer said in an email. mail.
“As more and more people are on the roads, we are seeing an increase in claims,” Morss-Fischer said. “Motor claims costs are being compounded by record inflation and supply chain disruptions. All of this has increased the cost of labor and materials, which translates into higher auto repair costs. »
Similarly, Allstate gave about $1 billion in rebates to auto policyholders nationwide at the start of the pandemic and cut rates in Illinois by about 5% in January 2021. But Allstate began to hiked rates last September and became prominent in January when it filed for a 12% increase, essentially reversing its rate cuts of the previous two years. With the August increase, Allstate’s insurance rates are significantly higher than pre-pandemic levels.
Nationally, Allstate has collected $2.5 billion in auto insurance premium increases since the start of the year, the company said.
Auto insurance rates may increase later. A June report from S&P Capital IQ said private auto insurers “besieged by the impact of inflation on vehicle repair and replacement costs” suffered an underwriting loss last year as crashes serious traffic conditions were increasing. But auto insurers’ “aggressive responses” to rising costs will keep premium growth at “high levels” in 2023, the report said.
Another contributing factor to rising insurance rates in the industry is the explosion in catalytic converter thefts, as the valuable pollution control device becomes a growing target for resale on the black market.
State Farm paid $62.6 million for 32,265 catalytic converter theft claims last year, a 13-fold increase since 2019. The pace is picking up this year, with $50 million paid for 23,570 claims in the first six months, according to the company.
Illinois ranked third in the nation for State Farm catalytic converter claims in 2021, with $3.1 million paid for 1,985 thefts. In the first six months of 2022, State Farm has already paid more in Illinois than all of last year, with $3.5 million for 1,912 catalytic converter theft claims.