After billion-dollar hike for Illinois car insurance, group calls for oversight

[January 20, 2024]  By Kevin Bessler | The Center Square

(The Center Square) – For the second consecutive year, Illinois car insurance rates increased by over a billion dollars in 2023.

The Illinois Public Interest Research Group reviewed more than 300 rate filings by 10 companies that represent about 80% of the Illinois car insurance market. Rates went up over $1.2 billion in 2023, the second straight year for over a billion dollar increase.

“We are highlighting this in part because Illinois is one of only two states whose regulators have no authority to reject or modify excessive car insurance rates and we think that’s a problem,” Illinois PIRG Education Fund Director Abe Scarr said.

Since the start of 2022, State Farm has increased rates by $753 million and Allstate has by $439 million. The two insurers combined represent 40% of the Illinois car insurance market.

"Auto claim costs are being compounded by inflation and supply chain disruptions," a statement from State Farm said. "All of this has increased the cost of labor and materials, which translates to higher auto repair costs. We continue to adjust to these trends to make sure we are matching price to risk."

Allstate had not responded to a request for comment by publication.

In 2023, the Illinois Coalition for Fair Car Insurance Rates introduced legislation that would allow the Illinois Department of Insurance to reject or modify excessive car insurance rate increases.

“Yet again, we’ve seen staggering insurance rate hikes on Illinois drivers,” said state Rep. Will Guzzardi, D-Chicago. “We need rules to make sure the car insurance industry is accountable, transparent, and fair in setting its rates.”

Kevin Martin, executive director of the Illinois Insurance Association, said if passed, the legislation will do the exact opposite of what it is designed to do.

“I think if this bill is passed and signed into law, Illinois will go from probably the premiere state for insurance companies to want to do business to by far the worst,” Martin said last year.

The PIRG report notes that the 2022 and 2023 auto insurance rate hikes came after insurers overcharged customers during the first year of the COVID-19 pandemic. According to analysis of data released by the Illinois Department of Insurance in June 2022, the top four car insurance companies by Illinois market share, State Farm, Geico, Progressive and Allstate, made around $500 million more in 2020 than they would have needed to maintain 2019 profit levels.

Responding to public pressure, the companies collectively returned about $220 million to customers in 2020 during the height of the pandemic.

Scarr said further legislation may be needed.

“Lawmakers are going to hear from their constituents about these big rate hikes year after year so I’m optimistic that we may be able to make some incremental change this year and if not this year then we’ll keep at it next year,” said Scarr.