What's driving skyrocketing property insurance premiums in Illinois?

Rates have gone up by 20-30% since the start of last year

What's driving skyrocketing property insurance premiums in Illinois?


By Mika Pangilinan

Illinois homeowners are facing skyrocketing property insurance premiums rivaling those of wildfire and hurricane-prone regions.

Conversations about America’s property insurance crisis are typically focused on states that are frequently subjected to extreme weather events like California and Florida, but Illinois has emerged as one of six states with the highest rate increases.

According to analysis conducted by S&P Global Market Intelligence for The Wall Street Journal, homeowners’ premiums in Illinois have risen by 20% to 30% since the start of 2022.

The other states on the list—Texas, Arizona, North Carolina, Oregon, and Utah—are more accustomed to weather-related catastrophes. Illinois sees milder weather by comparison, with claims costs mostly limited to tornadoes and hailstorms.

Delving into why Illinois residents are witnessing rate hikes on par with catastrophe-prone regions, Crain’s Chicago Business pointed to the state’s current rate regulation regime, in which insurers are not required to obtain prior approval before revising their rates.

But Jeffrey Brewer, of the American Property Casualty Insurance Association (APCIA), said Illinois is not immune to supply chain issues, labor inflation, and rising reinsurance costs that have been driving up expenses for insurers nationwide.

The state has also experienced an increase in tornadoes, Brewer told Crain’s, contributing to the rising costs of inflation, building and repair costs, as well as reinsurance.

Allstate, which ranked as the second largest homeowners’ insurer in Illinois, has raised rates by nearly 23% on average this year, according to state filings. During the first quarter, the company reportedly hiked residential property insurance rates for most policyholders by almost 31%, resulting in an average annual premium increase of about $436, or over $36 per month.

Farmers Insurance, the fourth-largest homeowners’ insurer in the state, followed a similar trend, with rate increases totaling 25.4% since December 2021.

A spokesperson for the Illinois Department of Insurance said they are “aware of the current market and continue to monitor ongoing developments.”

The statement from the agency noted that the rate increases in Illinois are primarily being driven by losses, settlement costs, and associated expenses. It said the presence of over 200 companies within the homeowners’ market ensures competitive rates.

“Illinois has a robust insurance market with over 200 companies offering homeowners’ coverage,” the spokesperson told Crain’s. “Companies consistently compete for market share primarily by offering the most competitive rate their loss experience can support.”

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