State Farm is set to increase auto insurance rates in Illinois for the second time this year.
The 6% average hike will take effect on June 5, just five weeks after a 6.5% increase was implemented in the state.
According to a report by Crain’s Chicago Business, the new rates will add roughly $65 annually to the average policy, on top of the extra $58 per year brought by the previous rate hike. Combined, policyholders are expected to see increases amounting to $114 on average.
In an email to the business publication, State Farm spokeswoman Gina Morss-Fischer said the rate hikes are a result of inflationary pressures, supply chain issues, and higher claim costs.
“We are making adjustments to ensure we match price to risk,” she told Crain’s Chicago Business.
However, she did not respond to a question about multiple rate hikes in other states.
State Farm suffered a record net loss of $6.7 billion in 2022, marking the past year as its most unprofitable year to date. This loss, which includes claims payments and reserves adjustments, had been so pronounced that it exceeded what was collected in premiums.
As a mutual insurer, State Farm is not subject to shareholder pressures and has been slower to respond to claims inflation compared to its competitors like Allstate, Crain’s Chicago Business noted.
Still, State Farm did join its rivals in cutting back on advertising in 2022, spending about $1.01 billion compared to $1.07 billion in 2021 and its five-year peak of $1.21 billion in 2019.
Among the county’s biggest personal lines P&C insurers, Progressive was the biggest advertising spender in 2022, logging $1.73 billion in total ad expenses. Meanwhile, GEICO was the one to decrease its ad spend the most, with expenses that were roughly $800 million less than the prior year.
However, State Farm and GEICO are two of the most recognizable names in the insurance industry. Both companies have become household names thanks to their clever and entertaining commercials that have captured the attention of audiences nationwide. Their commercials have not only captured the attention of audiences but have also helped to establish their brands as trusted and reliable providers of insurance. By using humor, relatable scenarios, and memorable taglines, State Farm and GEICO have set the bar high for other insurance companies when it comes to creating effective and entertaining commercials. There's no denying that both companies included in the list of best insurance commercials of all time.
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