Illinois Car Insurance Rates Soar Over $1.25 Billion in 2023

Legislation has been introduced to empower the Illinois Department of Insurance to oversee and potentially modify excessive car insurance rate hikes.

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Recent hikes follow a period where insurers reportedly overcharged customers during the first year of the COVID-19 pandemic. Image via Shutterstock.

Illinois drivers were hit with a significant increase in car insurance rates, surpassing $1.25 billion in 2023---the second year in a row where rate hikes exceeded $1 billion dollars.

According to a recent analysis by the Illinois PIRG Education Fund, the 10 largest car insurance companies, which represent 81% of the state's market, were responsible for the increase. When including smaller companies, the overall increase for Illinois drivers in 2023 is even more pronounced.

State Farm and Allstate, two Illinois-based insurers, led these rate increases, raising rates by $364 million and $210 million respectively. Since 2022, these increases amount to almost $2.4 billion, with State Farm and Allstate alone accounting for a significant portion of this rise.

This pattern of escalating costs comes despite Illinois being one of only two states where regulators lack the authority to reject or modify excessive insurance rates. The other state with similar regulatory limitations is Wyoming, the least populous state in the U.S.

"Illinois car insurance customers deserve the same basic consumer protections most Americans take for granted," said Abe Scarr, director of the Illinois PIRG Education Fund. "2023 should be the last year insurance companies can raise our rates by anywhere near---let alone more than---a billion dollars without scrutiny from the public and regulators."

These recent hikes follow a period where insurers reportedly overcharged customers during the first year of the COVID-19 pandemic. In 2020, the top four insurance companies by Illinois market share---State Farm, GEICO, Progressive and Allstate---earned approximately $500 million more than necessary to maintain their 2019 profit levels.

Despite returning about $220 million to customers in 2020 under public pressure, these companies still profited significantly from the pandemic, leading to calls for greater regulatory oversight.

In response to these increases, the Illinois Coalition for Fair Car Insurance Rates, along with state Rep. Will Guzzardi, D-39, and Sen. Javier Cervantes, D-1, introduced legislation to empower the Illinois Department of Insurance to oversee and potentially modify excessive car insurance rate hikes.

"These premium increases fall on the backs of the families who can least afford to pay more," Guzzardi said. "We need rules to make sure the car insurance industry is accountable, transparent and fair in setting its rates."

The Illinois General Assembly has already passed legislation empowering the Department of Insurance to regulate rate hikes in the individual and small business health insurance market. Cervantes emphasized the need for similar oversight in the car insurance sector, especially given the discriminatory impact of non-driving-related factors in rate setting.

Illinoisans are also grappling with steep hikes in homeowners insurance rates, with an increase of 20% to 30% since January 2022, one of the sharpest in the country.

The Illinois PIRG Education Fund's analysis was based on more than 300 filings by the top 10 insurance companies.

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