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As reported in The Wall Street Journal, Illinois is one of six
states with the steepest increases. Tornado-prone Illinois has
joined extreme weather targets like Texas and California on the
list that was compiled with info from S&P Global Market
Intelligence.
Putting the situation into perspective for The Center Square was
Brooke Kelley, assistant vice president of state government
relations for American Property Casualty Insurance Association.
“We’ve seen an increase in tornadoes in addition to the rising
cost of inflation,” she said.
With inflation at a 40-year high, she said that building and
repair costs are high, and that is having an impact on insurance
costs across the nation.
“We live and work in more expensive homes and buildings and
hazard-prone areas,” Kelley said.
When disaster strikes, these homes and buildings are often more
costly to fix or rebuild. For instance, Kelley said
single-family residential construction costs have risen 25% for
construction materials and 30% for construction labor since the
start of the pandemic.
“Right now, insurers all over, to include Illinois, are paying
out more in claims than they’re collecting in premiums,” she
said.
Typically, Kelley said Illinois runs in the middle of the road
when it comes to property insurance premiums, even though
there’s the major city of Chicago in its midst. She described
the competitive climate resulting from more than 200 insurers
doing business in the state as good for the consumer.
Kelley also clarified a common misconception about who pays for
disasters in other states. She noted that Illinois is not
sharing the burden of extreme weather events in other states.
“Sometimes there is some confusion like as if somebody in
Illinois is paying for somebody in Florida, and that’s not the
case,” Kelley said.
Besides shopping around, if property owners want to save money
on insurance, Kelley said one of the best ways is mitigation.
This means taking steps to reduce the risk of an undesirable
event.
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