The price of car insurance for Illinois drivers surged by more than $1.25 billion last year — following a $1.1 billion increase in 2022, according to a consumer group’s analysis of rate filings.
The report only looked at the 10 largest auto insurers, who represent 81% of Illinois’ auto insurance market, and suggested that rates could have risen even more last year.
Bloomington-based State Farm and Allstate, headquartered in Northbrook, raised rates by the largest amounts at $364 million and $210 million. The companies make up about 40% of the state’s auto insurance market.
Allstate said in a written statement: “Our payments to help customers recover from accidents have increased significantly in recent years with more cars on the road, more severe accidents, and higher repair costs from inflation.”
State Farm said in a written statement: “Auto claim costs are being compounded by inflation and supply chain disruptions. 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.”
The nonprofit Illinois PIRG Education Fund examined more than 300 rate filings in Illinois for the 10 largest auto insurers and their subsidiaries. It found the premium increases for new and renewing customers during 2023 totaled $1.25 billion, affecting more than 5 million Illinois policyholders.
“Illinois car insurance customers deserve the same basic consumer protections most Americans take for granted,” said Abe Scarr, Illinois PIRG’s education fund director.
The consumer group is pushing for regulators to have more of a say in how much insurers can charge.
Unlike some states, where auto insurance companies must get prior approval for rate increases, Illinois allows insurers to set whatever rate they choose, then inform the Illinois Department of Insurance.
State Rep. Will Guzzardi and state Sen. Javier Cervantes, both Chicago Democrats, introduced legislation last year that would give the department authority to reject or modify “excessive” rate increases and ban the use of certain “non-driving” factors in setting premiums.
Robert Passmore, vice president of the Chicago-based American Property Casualty Insurance Association, said that, though the rate of inflation is coming down, insurers are still dealing with higher costs to repair cars and pay medical bills after accidents.
Increasingly complicated technology in newer cars is also driving higher repair costs, he said.
“All of those things are continuing to go up,” Passmore said, adding that it’s an issue across the country. “Nothing is happening here that isn’t happening everywhere else.”
High claims-handling costs inevitably lead to higher premiums, Passmore said.
U.S. auto insurers cumulatively paid out $1.12 in claims and expenses for every $1 of premiums written in 2022, according to a spokesman for the Insurance Information Institute, citing S&P Global figures.
The insurance industry is fighting attempts at more regulation in Illinois, whether it’s greater oversight on prices or proposals to eliminate factors such as gender, marital status, age, occupation, schooling, homeownership, wealth or credit scores from car insurance rates.
It is already illegal to use race, ethnicity or religion in insurance rates.
The insurance industry argues that Illinois’ light regulations preserve competition and that consumers are free to shop around.
Eliminating non-driving factors from pricing would result in less accurate risk predictions and it would mean some customers who now get lower rates would end up paying more, industry representatives say.
