Inflation may be moderating, but home and auto insurance premiums are still going through the roof in Illinois, with double-digit rate increases baked into this year’s bills and no relief in sight.

Allstate is hiking homeowners insurance rates by 12.7% this week, while State Farm is planning a 12.3% increase in May, according to separate state filings by both Illinois-based companies.

Meanwhile, car insurance rates are up 28% in the state this year, according to personal finance website Bankrate.

“Insurance is reactionary, so even though inflation is currently slowing down, when we experience losses, insurance companies pay for them, and everything’s at a premium,” said Shannon Martin, a Bankrate analyst. “They’re trying to recoup their losses and adjust the rates accurately for future losses.”

For both auto and home insurance claims, the cost of repairs are up steeply, as are the number of extreme weather events wreaking havoc on property, Martin said. A pandemic-driven increase in traffic fatalities has also led to a rise in expensive auto insurance claims.

Insurance companies have been aggressively raising rates to keep up with claim costs, but it may take a while before easing inflation translates to smaller rate increases for customers.

“Claim costs are being compounded by inflation and supply chain disruptions,” State Farm spokesperson Sevag Sarkissian said in an email. “All of this has increased the cost of labor and materials, which translates to higher repair costs. We continue to adjust to these trends to make sure we are matching price to risk.”

Nationally, auto insurance premiums are up 26% this year, but rates in Illinois are rising even faster. Statewide premiums are up 28% to an average annual cost of $2,310, while rates in Chicago have spiked 34% to an average of $2,532 for 2024, according to Bankrate.

Auto insurance premiums have risen by nearly $2.4 billion statewide over the last two years, with State Farm increasing rates by $753 million and Allstate by $439 million, according to a report by Illinois PIRG, a nonprofit consumer group. Bloomington-based State Farm and Northbrook-based Allstate represent 40% of the Illinois car insurance market.

PIRG is backing proposed legislation to implement a rate review process for auto insurance in Illinois, one of only two states without such oversight.

“2023 should be the last year car insurance companies can raise our rates by anywhere near — let alone more than — a billion dollars without scrutiny from the public and regulators,” Abe Scarr, Illinois PIRG director, said in a news release Wednesday.

At the onset of the pandemic, State Farm cut auto insurance rates and Allstate issued about $1 billion in rebates to auto policyholders as drivers stayed off the roads during the lockdowns.

Since then, the highways have gotten busier — and more dangerous — as drivers navigate the post-pandemic landscape.

Traffic fatalities surged by more than 10% in 2021 to 42,939 deaths, a 16-year high, according to the National Highway Traffic Safety Administration. That trend, however, has been improving, with six consecutive declines in fatalities since the second quarter of 2022, a NHTSA spokesperson said.

The impact of inflation on vehicle repair and replacement parts also spiked during the pandemic. But inflation, which peaked at an annual rate of 9.1% in June 2022, is down to 3.1% as of last month, according to the Consumer Price Index.

While the trajectory of auto repair costs may begin to flatten, insurance companies say their rate increases have yet to catch up with claim expenses.

“We still lost money on auto insurance last year,” Allstate CEO Tom Wilson told the Tribune. “So it wasn’t that we were raising the prices and going to the bank.”

At the same time, the cost of home insurance has increased by 23% nationally since January 2023, with the current average premium for a $250,000 home at $1,759 per year, according to Bankrate’s Martin.

In Illinois, Allstate’s 12.7% increase in homeowners insurance takes effect this week, adding about $237 per year to the average policyholder’s premium, according to the state filing.

State Farm’s 12.3% homeowners insurance rate increase goes into effect March 15 for new business and May 15 for renewals, adding about $138 to the average policyholder’s annual premium.

The single biggest reason home insurance rates are going through the roof is the roof itself, according to Allstate’s Wilson.

“When you look at your homeowners insurance, a large part of the losses associated with your home are the roof,” Wilson said. “And that comes from weather, hail, wind storms, straight line winds — roofs are the things that are most exposed. And so with more severe weather comes more severe damage and then it costs more to fix it.”

Illinois has fared better than some states. The highest home insurance costs are in Nebraska, Oklahoma and Kansas, where premiums average more than $4,000 per year, Martin said.

Meanwhile, in Florida, Louisiana and California, it can be hard to get any home insurance coverage, due in large part to the increase in climate change-related severe weather events, Martin said.

“It’s a major factor and it’s also the unpredictability of it because climate scientists are saying extreme weather is really only going to get worse,” Martin said. “And so insurance companies are trying to take into account how to rate for this thing that we don’t quite understand yet.”

Earlier this month, Allstate reported a net income of $1.46 billion in the fourth quarter due to “improved auto profitability and mild weather,” Wilson said in a news release. But Allstate lost $316 million for the year and nearly $1.4 billion in 2022, mostly because of weather catastrophes and lagging policy rate increases, the company said.

State Farm, which is not publicly traded, recorded a $6.7 billion net loss in 2022, its most recent annual report, dragged down by steep losses in its auto insurance business.

rchannick@chicagotribune.com