(The Center Square) – State Farm’s plan to raise homeowners insurance rates by more than half a billion dollars in Illinois has reignited calls from consumer advocates to overhaul how the state oversees insurance rates.
“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.
