State Farm raising Illinois homeowners' insurance rates, watchdog group warns

State Farm raising Illinois homeowners' insurance rates

State Farm is raising Illinois homeowners insurance rates this summer. Here's why ? and what advocates are calling for.

CHICAGO - State Farm is raising Illinois homeowners' insurance rates by 27% this summer, citing rising costs from extreme weather.

What we know:

State Farm will implement a $523 million rate increase in Illinois starting July 15 for new policies and Aug. 15 for renewals.

The Bloomington-based company said the hike is "primarily driven by expected catastrophe losses," as severe weather becomes more frequent and costly.

For nearly 1.5 million Illinois homeowners with State Farm policies, this means an average annual premium jump of $746.

By the numbers:

In the 1980s, the U.S. averaged three "billion-dollar" weather events per year, according to the Illinois Public Interest Research Group (PIRG), a watchdog group.

That grew to six per year in the 1990s, seven in the 2000s, 13 in the 2010s, and reached 28 in 2023, the highest recorded. The U.S. saw 27 in 2024.

In Illinois and other Midwestern states, tornadoes, wind and hail drive most insurance losses. Allstate data shows these events accounted for 93% of its catastrophe losses in 2023, compared to just 7% from wildfires, hurricanes and tropical storms.

What they're saying:

Illinois PIRG Director Abe Scarr is urging state lawmakers to act before the insurance market reaches crisis levels as seen in Florida and California.

He called on the General Assembly to empower the Department of Insurance to review and reduce rate hikes. This comes after legislation to give the department rate review authority stalled in the spring without a Senate vote.

"Extreme weather events are wreaking havoc on American communities and disrupting insurance markets – and the impacts are particularly costly here in the Midwest," Scarr said. "At a minimum, Illinois should empower the state Department of Insurance to reject or modify excessive rate hikes, a basic consumer protection that residents in almost every other state enjoy."

He added, "As extreme weather events become the ‘new normal,’ the Illinois Department of Insurance needs greater insight into insurance industry business practices and levers to hold insurers accountable."

Gov. JB Pritzker statement

"I am deeply concerned by State Farm’s unfair and arbitrary insurance rate hike on Illinois homeowners.

"These increases are predicated on catastrophe loss numbers that are entirely inconsistent with the Illinois Department of Insurance’s own analysis – indicating that State Farm is shifting out-of-state costs onto the homeowners in our state. Hard-working Illinoisans should not be paying more to protect beach houses in Florida.

"In addition to increased premiums, State Farm intends to raise out-of-pocket deductibles and reduce payouts for certain claims. In total, these changes will cost Illinois homeowners hundreds of additional dollars per year without a state-based justification or corresponding increases in protection.

"Over the past six years, our state economy has flourished based on transparent markets and fair competition. State Farm's actions are antithetical to the core principles that the Illinois business community is built on.

"Today, I’m directing the Illinois Department of Insurance to take all available regulatory action to enforce the law and ensure a level playing field for Illinois homeowners.

"I also am calling on the General Assembly to enact a legislative solution during veto session that prevents insurance companies from taking advantage of consumers through severe and unnecessary rate hikes like those proposed by State Farm."