…Adding… Erin Collins, senior vice president of state and policy affairs at the National Association of Mutual Insurance Companies…

NAMIC is alarmed to see the Governor of Illinois publicly misunderstand and mischaracterize the business of insurance. Consumers demand and deserve competitive and dynamic insurance products to insure against what is an increasingly risky world. By continuing a pattern of misinformation, the Governor deteriorates not just his state’s insurance market, but also the trust that consumers should have that fairness and accuracy will govern their future insurance needs.

Let’s be clear: cost-shifting is not being used in actuarial practices. Illinois policyholders are not subsidizing risk in other states. To the contrary, insurers are required to price based on actuarially sound, state-specific data and are held to rigorous standards under the Illinois Insurance Code. In fact, to further cement that standard in response to the Department’s stated concern, industry proactively proposed an explicit ban on cost-shifting during this spring’s legislative session —an offer that was rejected without explanation. 

Despite clear and repeated explanations from those that understand the industry, this misinformation campaign continues to misstate core actuarial principles of insurance. Alarming public statements from the Governor’s office and Department of Insurance—claiming that policyholders are bearing costs unrelated to their coverage—demonstrate a fundamental misunderstanding of how premiums are developed, risks are pooled, and capital is managed to ensure long-term solvency.

NAMIC encourages policymakers and consumers alike to cut through the noise – insurance is about math. You pool risk with your neighbors. Rather than focusing on scoring political points, let’s engage with the facts. Lowering rates starts with lowering risk. The industry has and will continue to bring proposals to increase mitigation, address community wide resilience, reduce frivolous lawsuits, and increase availability and affordability in Illinois.

Insurance will always be about protecting consumers. Insurance isn’t about press conferences or polling—it’s about data, discipline, and long-term solvency. When math becomes political, consumers lose.

…Adding… Joint Statement from the Illinois Insurance Association, American Property Casualty Insurance Association and National Association of Mutual Insurance Companies…

As organizations committed to protecting consumers and promoting a fair, competitive, and diverse insurance market, the Illinois Insurance Association (IIA), the American Property Casualty Insurance Association (APCIA) and the National Association of Mutual Insurance Companies (NAMIC) strongly reject claims that insurers are arbitrarily hiking rates or shifting out-of-state costs onto Illinois policyholders and are releasing the following joint statement:

“Rates filed by insurance companies in Illinois reflect the rising cost of claims, which is primarily driven by local natural disasters and inflation, and are not influenced by losses in other states. Illinois experienced 120 reported tornadoes in 2023 alone – more than any other state. These extreme weather events, combined with elevated inflation and high material costs, have dramatically increased the cost of repairing and rebuilding homes.

“This reality puts enormous financial strain on everyone, including insurers. Over the past decade, State Farm alone has incurred $1.26 in losses for every $1.00 in premium earned in Illinois as they fulfill their commitment to stand by homeowners when disaster strikes. According to the National Association of Insurance Commissioners’ most recent profitability report, homeowners’ insurers in Illinois had a significant 8.3 percent underwriting loss over the last decade and a staggering 30.3 percent underwriting loss reported in 2023.

“Illinois’ insurance market remains one of the most competitive in the nation and we are committed to maintaining the state’s competitive market and ensuring insurers can continue to fulfill their promises to policyholders.”

* 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.