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“Home insurance rates are on the rise in Illinois due to rising
home replacement costs and more frequent severe weather events
that are driving up the cost and frequency of claims,” State
Farm said in a news release this week. “These changes reflect
broader trends in loss patterns and repair costs and are
necessary to help ensure we can continue providing reliable
coverage to our policyholders.”
Abe Scarr, director of the Illinois Public Interest Research
Group, said there is currently no regulatory oversight in
Illinois over the rates State Farm sets.
“There’s not even the boilerplate in the law that every other
state has, that rates shall not be excessive, deficient or
unduly discriminatory. That’s standard everywhere except
Illinois,” said Scarr.
While State Farm cites climate trends and home replacement costs
going up, Scarr says only clear oversight will ensure the
numbers match reality.
“If they’re confident, and if it’s all above board, it should be
able to withstand scrutiny,” he said. “That’s what we’re asking
for.”
Scarr said Allstate and State Farm have been big players at the
Illinois State Capitol for many years, which could explain why
Illinois cannot reject or modify excessive rate hikes.
Illinois homeowners are already paying 50% more for insurance
than they did three years ago, the second-highest increase in
the nation.
Gov. J.B. Pritzker sharply rebuked State Farm’s move, accusing
the company of shifting costs onto Illinois families for weather
disasters elsewhere.
“Hard-working Illinoisans should not be paying more to protect
beach houses in Florida,” said Pritzker in a statement. “State
Farm's actions are antithetical to the core principles that the
Illinois business community is built on.”
Scarr said considering the impacts of extreme weather, it's time
for the General Assembly to grant the Illinois Department of
Insurance the authority to look at rate increases.
“We're very pleased that the governor came out forcefully
calling for the General Assembly to take action this fall,” said
Scarr.
Scarr argues Illinois can’t afford to stay an outlier when it
comes to regulating insurance costs.
"It's not a question of rate hike or no rate hike. It's a
question of, ‘Is a half a billion dollar rate hike appropriate,
or should it be more like $300 million?’” said Scarr.
Illinois legislators are scheduled to return to the capitol this
October. |
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