Auto insurance

State Farm raises Illinois auto insurance rates by more than 8%

This latest increase will increase the average annual premium by nearly $70, or nearly $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 increased premiums for about one-third of drivers in the state by about $127 per year on average. The latest increase comes into effect on September 13.

A State Farm spokeswoman had no immediate comment.

Northbrook-based Allstate, Illinois’ second-largest auto insurer after State Farm, recently requested a 16% average rate increase. Two double-digit increases from Allstate this year total nearly 30%, or $520 a year.

Want to save money with Geico, as the Chevy Chase, MD-based company so often advertises? This will be much more difficult after Geico’s 17% average rate hike takes effect on August 19. Geico’s multiple increases over the past year will have pushed policyholder premiums up by about $470 a year on average. Geico is the fourth-largest driver’s insurer in Illinois.

Auto insurers are struggling to meet claims settlement costs. A sharp rise in used car prices is the main cause.

But the unprecedented pace of rate hikes is pushing state regulators to back down. In a letter, the Illinois Department of Insurance asked State Farm to substantiate the latest increase with detailed data.

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

“In the spirit of cooperation, State Farm voluntarily provides requested information outside of departmental review under more specific investigative authority granted in the Illinois Insurance Code, but does not waive any rights future to maintain or assert that the Department has limited authority to: (1) require confidential, trade secret, or privileged information related to underwriting and/or (2) require insurers to create information/documents that are 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 settlement cited above,” the company wrote on July 28.

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

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

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. This rate reduction – far greater than that provided by other major auto insurers – strengthened State Farm’s already dominant position in the Illinois market.

Since mid-2020, the number of State Farm auto policies in the state has increased 6%, to just over 3 million, according to the filing. During the same period, the number of auto policies from Geico and Ohio-based Progressive fell. Geico and Progressive in the years leading up to the pandemic had gained market share in Illinois at the expense of Allstate and State Farm, among others.