Following A Billion-dollar Increase In Illinois Auto Insurance, A Group Demands Supervision


(The Marketplace) – In 2023, Illinois auto insurance rates rose by more than a billion dollars for the second year in a row.

Ten businesses, accounting for approximately 80% of the Illinois auto insurance market, submitted more than 300 rate files for consideration by the Illinois Public Interest Research Group. In 2023, rates increased by almost $1.2 billion, marking the second consecutive year of increases of over one billion dollars.

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

State Farm and Allstate have raised rates by $753 million and $439 million, respectively, since the beginning of 2022. Together, the two insurers account for 40% of the Illinois auto insurance market.

According to a State Farm statement, “auto claim costs are being compounded by inflation and supply chain disruptions.” The cost of labor and supplies has gone up as a result of everything, which raises the price of auto repairs. To ensure that we are aligning pricing to risk, we keep making adjustments in response to these trends.”

Allstate had not replied to a publication’s request for comments.

Legislation allowing the Illinois Department of Insurance to reject or amend excessive increases in auto insurance rates was filed in 2023 by the Illinois Coalition for Fair Car Insurance Rates.

Illinois state representative Will Guzzardi, a Democrat, stated, “Yet again, we’ve seen staggering insurance rate hikes on Illinois drivers.” “Regulations are necessary to ensure that the auto insurance sector sets rates in a fair, transparent, and accountable manner.”

If the law is passed, according to Kevin Martin, executive director of the Illinois Insurance Association, it will have the exact opposite effect from what it is intended to.

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

According to the PIRG analysis, insurers overcharged customers during the first year of the COVID-19 pandemic, which led to rate increases for auto insurance in 2022 and 2023. The top four auto insurance providers in Illinois by market share—State Farm, Geico, Progressive, and Allstate—earned almost $500 million more in 2020 than they would have needed to sustain 2019 profit levels, according to an analysis of data made public by the Illinois Department of Insurance in June 2022.

In 2020, at the height of the epidemic, the firms returned roughly $220 million to clients as a result of public outcry.

Scarr stated that more legislation might be required.

“I think we might be able to make some small changes this year, and if not, we’ll keep at it next year,” Scarr said. “Lawmakers are going to hear from their constituents about these big rate hikes year after year.”

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