Illinois leaders attack State Farm as it hikes home insurance rates

Amid fierce pushback from Illinois’ top political leaders, State Farm is defending a rate increase for its customers. Illinois homeowners covered by State Farm could soon see their insurance premiums go up by an average of 27%.

New policyholders will see the adjusted rate starting this Friday, while current customers will have to pay the new rate starting August 15. According to State Farm, average insurance premiums for the nearly 1.5 million Illinois customers are about $1,700.

The Bloomington-based insurance giant defended the hike, arguing the costs of rebuilding and repairing homes after severe weather events has increased due to inflation. This, coupled with more frequent severe weather events like flooding and tornados across the country, has resulted in losses for the company, according to State Farm.

State Farm said their division for homeowner insurance has been losing money over the past 15 years. Last year, the company paid out $1.26 for every dollar in premium collected and it was $1.30 in 2023. Corporate spokesperson Gina Morss-Fischer said it’s not sustainable long-term.

“We need to make enough profit to be able to keep our promises to our customers, to be able to serve them when the unexpected happens, when the next big storm comes through,” Moss-Fischer said.

Illinois elected officials, however, are skeptical. In a statement, Democratic Gov. JB Pritzker called it an “unfair and arbitrary insurance rate hike.” He went on to say the increases are predicated on catastrophe loss numbers that are “entirely inconsistent with the Illinois Department of Insurance’s own analysis,” and that State Farm is shifting out-of-state costs onto Illinois homeowners.

“Hard-working Illinoisians should not be paying more to protect beach houses in Florida,” Pritzker said in the statement.

State Farm, in its statement, dismissed Pritzker’s concerns as “political rhetoric” and said Illinois had more hail damage claims than any other state except Texas in 2024, totaling $638 million. Morss-Fischer defended the information State Farm has provided to the state.

“llinois rates are based on Illinois risk,” Morss-Fischer said. “We are seeing an increase in these severe convective storms all across the Midwest, but in states like Illinois, we saw a really big jump in tornadic activity.”

The National Oceanic and Atmospheric Administration in 2024 recorded 139 reports of tornados and 303 reports of severe hail in Illinois. So far this year, the NOAA has found 131 tornados, but only 142 hail incidents.

Currently, the Illinois Department of Insurance has the power to sue insurance companies over rate hikes once they’ve been in effect. But, State Sen. Michael Hastings, D-Tinley Park, said that process could take a couple of years.

He introduced a bill earlier this year that would require insurance companies to get prior approval from the IDOI for any rate increases of 5% or more, with a 30-day public comment period following a proposed rate increase of more than 10%. Hastings’ bill would have also capped rate hikes at 15% per year, unless the insurer could provide evidence of increased claims due to natural disasters. But the proposal went nowhere.

“All of a sudden, wham! All of our families in Illinois get jacked with a 27.2% increase,” Hastings said. “And then State Farm comes out… ‘Well, we spend $1.26 per dollar on every claim.’ Joe Schmo ain't buying that crap.”

The measure received considerable opposition from groups representing businesses, like the Illinois Manufacturers’ Association, as well as insurance companies such as State Farm.

“More regulation keeps prices in a place that may not be beneficial to a company,” Morss-Fischer said. “Competition is good for the consumer, and this has been a good marketplace for all of us because of that.”

Hastings said he spent months negotiating the measure with the insurance industry. He said State Farm had assured the lawmakers that rate prices would be kept stable while they worked on the bill during the summer to be introduced again in the fall veto session.

“State Farm acted in bad faith,” Hastings said. “I felt like the insurance industry not only stonewalled, but they also misled.”

Mawa Iqbal covers state government and politics for WBEZ. Follow @mawa_iqbal.