Illinois Governor JB Pritzker (pictured above) is urging lawmakers to grant new oversight powers to the state’s insurance regulatory body following State Farm’s decision to implement a 27.2% increase in homeowners’ insurance rates.
The move has prompted broader debate about the state’s approach to insurance rate regulation.
Illinois is the only state where regulators lack authority to reject rate filings on the grounds that they are excessive, inadequate, or unfairly discriminatory, according to a spokesperson for the Illinois Department of Insurance (DOI).
“This is why the governor recently called on the General Assembly for a legislative solution,” the spokesperson said, as quoted in a Best Wire report.
The rate increase, which is set to take effect this month, will impact approximately 1.49 million policyholders and is projected to generate $522.8 million in additional written premium, according to the filing. The change is part of an independent homeowners program operated by State Farm.
State Sen. Michael Hastings described the rate increase as unexpected, citing earlier discussions between lawmakers and insurers that suggested premiums were stabilizing.
Hastings introduced Senate Bill 268 in January, which would cap annual rate increases at 15% unless justified by supporting data. The bill also includes provisions to increase transparency and limit the use of non-property-related factors such as credit scores and occupation in pricing.
The DOI said it requested additional information from State Farm regarding the basis for the rate increase, raising questions about whether it was based solely on the company’s Illinois experience. According to the department, State Farm has not provided the requested data.
“We requested further information from State Farm to provide greater transparency into their market practices, but they have repeatedly refused,” the DOI stated.
State Farm responded by disputing the governor’s characterization of its filing as arbitrary, calling it “factually incorrect,” the report said.
The company said its Illinois homeowners’ business has posted underwriting losses in 13 of the past 15 years, including a loss ratio of $1.26 paid out for every $1 collected in 2024. It attributed the losses in part to an increase in severe weather events and noted that Illinois ranked second in the country for hail-related insurance claims last year.
In response to the claims environment, State Farm has implemented a minimum 1% wind-and-hail deductible on homeowners’ policies in Illinois. The company said the deductible is intended to help manage the impact of higher weather-related losses, the report said.
From 2010 through 2024, State Farm reported $16.9 billion in earned premium from Illinois homeowners’ policies and $8.57 billion in non-hurricane catastrophe losses. According to its filing, the company’s combined ratios exceeded 100 in all but two years during that period, indicating underwriting losses.
Illinois operates under a use-and-file system, which allows insurers to implement new rates before receiving formal approval. While the DOI has the authority to conduct market conduct and financial examinations, it cannot release findings until the appeals process is complete, a process that can take several years.
State Farm said it continues to work with state officials to address market challenges and maintain a competitive insurance environment. “The facts are simple,” the company said. “No company can absorb such losses forever and still be there for customers when disaster strikes.”
