Over the last three years, Illinois policyholders live in the only state outside of Utah who have faced 50% increases in their homeowner’s insurance.

Illinois Public Interest Research Group State [PIRG] Director Abe Scarr said those increases will “impact countless families across the state.” About 1.5 million State Farm policyholders will be impacted by the near half-billion rate hike — a 27% hike.

Scarr and PIRG are advocating for more regulatory control over insurance rate increases.

According to Bloomington-based State Farm, home insurance rates are on the rise in Illinois because of rising home replacement costs and more frequent severe weather events that drive up the cost and frequency of claims.

Scarr contended these increases are based on “expected” catastrophe losses mentioned in the rate filings, but at times have been wrong.

“[State Farm] is making predictions, and there is no reason to believe they are doing that perfectly. As they point out, they have been paying out more than they have been taking in. They haven’t gotten it right in the past, so why should we believe they will get it right this time?” Scarr said in an interview on WGLT’s Sound Ideas.

In addition to the spike, Scarr said State Farm’s new requirement to carry a minimum 1% wind/hail deductible is a worrying trend as homeowners are expected to pay more for insurance while receiving less coverage.

“It is reasonable to expect some changes, but those changes shouldn’t be homeowners paying more and getting less from the insurance industry. Especially from a company like State Farm that is sitting on a surplus of over $142 billion,” Scarr said. “While they’re asking Illinois families to pay a little more for the increase in extreme weather, maybe they can do something with their surplus as well.”

Some insurance companies have claimed the adoption of rate review in Illinois could result in certain companies removing their business from the state entirely.

Scarr said this statement is “overblown” because many states have consumer protection laws, and they still have insurance companies doing business.

“Certainly, there could be a time and place where state regulation is burdensome and impacts the willingness for businesses to conduct business in the state, but there is nothing at that level on the table,” Scarr said.

PIRG was “very pleased” to see the critical statement Gov. JB Pritzker issued regarding the State Farm action that he called an “unfair and arbitrary insurance rate hike.” Scarr felt Pritzker has taken good steps regarding insurance regulation in recent years.

In 2023-2024, Pritzker urged the Illinois General Assembly to adopt legislation regarding the rate review policies for health insurance that was approved in a bipartisan vote of 81-25. As insurance companies such as State Farm are increase their rates, PIRG thinks Pritzker is placing this issue as a priority as he encourages lawmakers to take more legislative action.

“The most basic thing the Illinois General Assembly can do is give the Illinois Department of Insurance [IDOI] basic authority to review rate increase proposals and to reject or modify them if they find them to be excessive,” Scarr said.

PIRG has supported several legislative measures regarding fair insurance rates, including an amendment to an Illinois Senate bill to regulate insurance rates so they are not “excessive, inadequate, or unfairly discriminatory.”

“It needs to be illegal in Illinois to charge excessive rates for homeowner’s insurance. We need a regulatory system to review and ensure that rates are not excessive, and to empower the IDOI to review increases,” Scarr said.

State Farm spokesperson Gina Morss-Fischer said the company welcomes the opportunity for ongoing discussion with the Illinois Department of Insurance, lawmakers and consumers about the challenges facing the home insurance market.

She stressed the insurer’s recent rate filing reflects risks seen in Illinois, not in other states — a charge made by the governor.

“Over-regulation and refusal to allow companies like ours the ability to charge accurate rates leads to a less competitive market and fewer choices for consumers,” said Morss-Fischer.