* First, some background from the Tribune…
As Texas grapples with the massive flooding that struck Hill Country and killed at least 119 people during the July Fourth weekend, many Illinois homeowners will soon see their home insurance rates skyrocket due to the increase in such extreme weather events.
State Farm is raising homeowners insurance rates in Illinois by a whopping 27.2% beginning Aug. 15, according to a filing with the state last month. The rate hike, one of the largest in the state’s history, will affect nearly 1.5 million policyholders. New policyholders will pay the higher rates as of July 15.
In its filing, Bloomington-based State Farm said the rate increase is driven by catastrophic losses related to extreme weather events in Illinois.
“Over the last several years, our catastrophe provision has proven to be inadequate when compared to our actual catastrophe loss experience,” State Farm said in the filing. “While there is volatility associated with extreme weather events, our Illinois catastrophe losses have exceeded the year’s catastrophe provision in 13 of the last 15 years, signaling the provision used in rating has been insufficient in recent history.”
* Governor JB Pritzker…
I am deeply concerned by State Farm’s unfair and arbitrary insurance rate hike on Illinois homeowners.
These increases are predicated on catastrophe loss numbers that are entirely inconsistent with the Illinois Department of Insurance’s own analysis – indicating that State Farm is shifting out-of-state costs onto the homeowners in our state. Hard-working Illinoisans should not be paying more to protect beach houses in Florida.
In addition to increased premiums, State Farm intends to raise out-of-pocket deductibles and reduce payouts for certain claims. In total, these changes will cost Illinois homeowners hundreds of additional dollars per year without a state-based justification or corresponding increases in protection.
Over the past six years, our state economy has flourished based on transparent markets and fair competition. State Farm’s actions are antithetical to the core principles that the Illinois business community is built on.
Today, I’m directing the Illinois Department of Insurance to take all available regulatory action to enforce the law and ensure a level playing field for Illinois homeowners.
I also am calling on the General Assembly to enact a legislative solution during veto session that prevents insurance companies from taking advantage of consumers through severe and unnecessary rate hikes like those proposed by State Farm.
Click here for the State Farm’s filing to the state and click here for the DOI’s objection.
Thoughts?
* More…
* Crain’s | State Farm to hike Illinois home insurance prices by another 27.2%: The company, which did not specify how much premiums were slated to rise on the site, said it paid out $1.26 for every $1 in Illinois homeowners’ premiums it collected in 2024. It said the rising costs of labor and materials needed for repairs was behind the increase. Weather trends also contributed, State Farm said. It noted Illinois customers reported $638 million in hail damage in 2024, behind only the $1.1 billion reported by Texas customers.
* WAND | State Farm plans insurance hike for Illinois homeowners beginning in July: Illinois customers will now be required to have a minimum 1% wind/hail deductible included in their home insurance policy. Additionally, auto insurance rates in Illinois will decrease an average of 5.7%, with some customers seeing premium reductions up to 15%. The rate adjustments will apply to new and existing policies beginning July 18.
* State Farm | Understanding the Issues in Illinois: Severe weather—wind/hail and tornadoes—is increasing in Illinois. Trends in recent years indicate damaging storms are more frequent here. In fact, Illinois had more hail damage claims than any other state except Texas in 2024. Illinois premiums are priced for the risk in this state—not for losses in other states, including wildfires, earthquakes, or hurricanes.
* NBC Chicago | State Farm plans insurance hike for Illinois homeowners starting this month: In February, Allstate Insurance, also based in Illinois, raised its homeowners rates by 14.3% in the state, the Tribune reported. Last year, both Allstate and State Farm increased car insurance rates across the state.
- Irreverent - Friday, Jul 11, 25 @ 9:05 am:
“Hard-working Illinoisans should not be paying more to protect beach houses in Florida.”
And Florida is one of the two red states that actually carries its own weight federally. For the rest of the hurricane-prone red states, we get to subsidize them both through our taxes and higher insurance premiums.
- Chicagonk - Friday, Jul 11, 25 @ 9:15 am:
I’m surprised by the size of the rate increase State Farm is proposing. It’s no secret that they have been losing money on personal lines, but 27% rate increase plus a 1% wind/hail deductible is excessive. Illinois luckily has a very healthy personal lines insurance market, so my recommendation for those with State Farm is to shop.
- Leatherneck - Friday, Jul 11, 25 @ 9:26 am:
The rate changes will affect renters (of which I am one by choice) and condo owners. Renters will see a 13.7% increase, condo owners 10.8%.
- P. - Friday, Jul 11, 25 @ 9:39 am:
My thought is JB is polling on “affordability” as an issue for working families.
- Steve - Friday, Jul 11, 25 @ 9:47 am:
I wonder if other insurance companies who write policies in other states want to come to Illinois. Maybe JB could promote that to increase competition.
- JB13 - Friday, Jul 11, 25 @ 9:52 am:
Only Florida beach houses?
Hmmm … Nothing significant happened in California recently, I guess. And absolutely no legislative meddling in their insurance market from Democrats in Sacramento that might result in distortions.
No, no. All Republicans’ fault, all the time, as all the smart people know
- Responsa - Friday, Jul 11, 25 @ 9:57 am:
Unfortunately it is likely that other personal lines carriers in Illinois will be following suit with substantial rate increases as well. If you have friends and family scattered around the country you are probably already aware that is is an industry problem not just an Illinois problem.
- Streator Curmudgeon - Friday, Jul 11, 25 @ 10:09 am:
If the State is serious about giving Illinois residents relief on homeowner’s insurance, it would enact legislation to let us CHOOSE whether we want our policy to provide compensation to buy an existing house to replace a destroyed one, instead of forcing us to pay premiums based on the cost of building a new, comparable house.
- P. - Friday, Jul 11, 25 @ 10:14 am:
Which party feverishly promotes deregulation of corporations who over and over again in response to the largesse stick it to normal Americans? That’s what I thought, thanks, and keep it moving, bub.
- TheInvisibleMan - Friday, Jul 11, 25 @ 10:15 am:
The newly announced tariffs impacting copper will certainly make replacement costs cheaper for insurers. Wait, not cheaper. I meant to say massively more expensive. Lumber price increases in the past year are even worse.
I’m sure the catastrophic losses are an issue, but the significant increases in costs of replacement after those losses is being caused by something other than a natural disaster.
It’s interesting how State Farm is focusing more on the natural disaster angle than the increased cost issue. While one of the stories does mention the increases in material costs, it mostly glosses over *why* those prices are increasing so significantly.
- TheInvisibleMan - Friday, Jul 11, 25 @ 10:21 am:
–it would enact legislation to let us CHOOSE whether we want our policy to provide–
Unfortunately that has been moving in the other direction for awhile now. Choices in insurance coverage amounts have instead been dwindling.
One of my favorite ways to keep my premiums low in the past was to massively reduce the coverage for ‘personal item replacement’.
That option was removed maybe a decade ago, and now the coverage provided is a fixed percentage of your total dwelling amount.
There is no possible way I will ever need an almost equal dollar amount as my entire house, to replace the personal items in my house. 1/10th of that amount was more than enough for me, but now that choice is gone and I’m forced into paying more for coverage I know for certain I will never use.
- clec dcn - Friday, Jul 11, 25 @ 10:25 am:
My State Farm property insurance has gone way up. I recently opted for higher deductible to help. It is really high and that with the already high property taxes is much. I too wonder if in the calculations we get hammered from other places with much great chances of damage. I glad PJ is looking into this might help. One thing though is at the moment no insurance can touch my cheap auto premiums by SF>
- Irreverent - Friday, Jul 11, 25 @ 10:29 am:
@JB13
California pays for itself. Same as Illinois. Same as New York.
I’ll admit Florida was a strange choice to focus on, when there are so many coastal red states producing net negatives in fiscal rather than just human rights terms.
- Irreverent - Friday, Jul 11, 25 @ 10:30 am:
@Streator
If you’re paying a mortgage, the bank requires you to carry enough insurance to protect their investment.
If your home is paid off, you’re comparatively doing fine.
- Thomas Paine - Friday, Jul 11, 25 @ 10:31 am:
@Leatherneck - I think you are msreading the filing. It calls for a 27% hike on “non-tenant homeowners.” That sounds like you.
A couple of things in this filing are really gonna kill State Farm.
Page 32 for example details the potential catastrophic events that impact their bottom-line exposure, and mentions the threat of hurricanes in Hawaiian Islands, Gulf Coast and Mid-Atlantic. It does also include the New Madrid fault. But I would challenge State Farm to provide data showing an increase in actual payouts from earthquakes in Illinois or data that shows earthquake risk has increased.
Page 29: Commissions to insurance agents are 18%. Just Wow. This is why Progressive and Geico combine for 27% of the car insurance market now.
Page 19, Exhibit 1N: Again, commissions paid are almost 11% of total premiums collected, that includes renewed policies. Commissions are actually 140% of company profits. Compare that to a car salesman, who typically pockets 20-40% of profit, or a real estate agent, who sees less than 5% of total sale price.
Turn on your t.v. State Farm can afford Caitlin Clark. I enjoy watching Clark’s commercials during NBA games, but they are a lot less entertaining if I am paying an extra couple hundred bucks a year to watch them. For $300, I would rather go to a WNBA game.
I suggest that Illinois force State Farm to open its books, and lets find out what commissions are industry standards around Illinois.
Also, I want specific info about specific weather events, especially hail and tornado, and claims filed as a result. There was a huge spike in hail/wind claims in 2023 and 2024. Is that because events doubled, or because State Farm had become much more lacadasical in its claims adjusting. Because it seemed like everyone in my neighborhood was getting a new roof in 2023.
- RNUG - Friday, Jul 11, 25 @ 10:35 am:
First off, I don’t use State Farm.
In my experience with 2 residential and 2 commercial properties, all the insurance companies have hiked their rates significantly the last 5 years or so. We switched the residential companies and got some relief, but the last 2 years those jumped about 30% per year, so I’m back paying about what the one company wanted 3 or 4 years ago.
Second, I find the hail damage excuse interesting. 2 of the aforementioned buildings have metal roofs. These days there is a standard exclusion for cosmetic damage to metal roofs; unless it is holed through or leaking, you are on your own with chips, scratches and dents. I know not everyone has a metal roof, but the insurance companies have limited their liability in that area.
The Governor’s proposal sounds good in theory, but it also sounds like it would be a nightmare to administer / audit. A better proposal might be to create more competition by making it easier to license insurance companies in Illinois.
- lake county democrat - Friday, Jul 11, 25 @ 10:45 am:
Two thoughts. First, I’m with JB at this point: let’s see the numbers. If State Farm can justify the hikes based on in-state risk, fine, else, reduce them. Second, on a political note, I wish the Dems would use these hikes as an opportunity to talk about climate change - not so much here in Illinois but in purple and red states.
- Cool Papa Bell - Friday, Jul 11, 25 @ 11:00 am:
I cut my premium with State Farm a year ago by upping my deductible. I’ll be curious to see what the bill is this year. I decided that we would just work to keep a “reserve” fund for a major insurance event on the house and move on with lower yearly costs and roll with what happens.
Personally, news like this, the pending tariff’s, I’ve got two kids off to college over the next two years, an unexpected medial bill this year… We will make it. But man, the margin just keeps getting tighter and tighter.
- JS Mill - Friday, Jul 11, 25 @ 11:04 am:
=No, no. All Republicans’ fault, all the time, as all the smart people know=
Texas says “Hello”.
- Independent - Friday, Jul 11, 25 @ 11:26 am:
“It’s interesting how State Farm is focusing more on the natural disaster angle than the increased cost issue. While one of the stories does mention the increases in material costs, it mostly glosses over *why* those prices are increasing so significantly”
I used to work for State Farm and know how diligently they work to protect their image. If they even hinted that tariffs’ potential effect on costs were a part of the rate hike they would risk incurring the wrath of 47, and being drawn into a political firestorm they want no part of.
- Downstate - Friday, Jul 11, 25 @ 11:37 am:
The beauty of a free market system is that if State Farm’s rates get too high because of their business in Florida is that another insurer will have a HUGE advantage in taking business away from them.
- Pundent - Friday, Jul 11, 25 @ 11:39 am:
=A couple of things in this filing are really gonna kill State Farm.=
I don’t think the answer to reducing State Farm’s proposed premium increase lies in its sale, marketing, and distribution strategies. Paid agents and celebrity endorsements are marketing decisions. And ultimately it’s up to consumers to decide if they want to pay for those decisions. And as you point out there are plenty of other options. If State Farm is an outlier with its premiums options are merely a click or call away. I routinely shop insurance options as a result. But as others have noted this is an industry problem. The risk is increasing along with the cost of covering claims. No insurer is immune to those realities.
- Yooper in Diaspora - Friday, Jul 11, 25 @ 11:45 am:
Had an interesting conversation with a State Farm agent recently, and picked up what Irreverent said: rates are set based on what happens in each state. I share lake county democrat’s perspective: if the rates are justified, we should reckon with them, AND call more attention to a need to address climate change. That includes more problem-solving about how to collectiely fund rebuilding after catastophe.
I sense Pritzker is attacking the wrong target, but we’ll see what the DOI is able to do.
- Sue - Friday, Jul 11, 25 @ 11:47 am:
A lot of foolish populism and pontificating on the part of the Governor- if he thinks its arbitrary and unfair- he is in charge of the Illinois Dept of Insurance- as far as the Florida beach house nonsense- nice dig at a Red State BUT State Farm actually claimed the loss ratio problem is largely California firs losses- If this is JB at his best- might as well skip the NC Dinner- your presidential dream is not going to come to fruition
- Liz - Friday, Jul 11, 25 @ 12:18 pm:
So State Farm says the increase is due to very high losses in the past and a change in assumptions for catastrophic events in Illinois and Pritzker says, “that’s a lie! You’re offsetting Florida losses!” and proposes that the legislature restrict future rate increases. That sounds like a recipe for the sort of restrictions that will cause insurers to leave the state, in the same way as many insurers are no longer writing policies in CA due to the restrictions there. And I say that as a State Farm policyholder — to be honest, we switched to them from Allstate not that long ago because they had better rates. Now I wonder whether those “better rates” were actually set too low to try to get more customers.
In any case, even if State Farm is offsetting its California losses, the answer is to promote more competition, not chase insurers away.