The state of Illinois has filed a lawsuit against State Farm, alleging the insurer failed to comply with a regulatory examination of its homeowners insurance business.
The complaint, submitted in Cook County Circuit Court on behalf of Illinois Director of Insurance Ann Gillespie, claims State Farm did not provide state examiners with requested data on premiums, policy coverage types, insurance limits, and claims related to homeowners policies.
State Farm, headquartered in Bloomington, responded that it did not break any laws.
“This lawsuit is without merit and has nothing to do with Illinois customers or the cost of their insurance,” the company said.
State Farm also said that it remains committed to working with the Illinois Department of Insurance and values its relationships with state leaders, adding that it aims to serve customers and support a competitive insurance market.
The legal action comes as insurance companies face increased scrutiny from consumer groups and lawmakers over ongoing price increases. State Farm is under particular attention for its previously announced plan to raise homeowners rates in Illinois by an average of 27.2%.
Illinois Attorney General Kwame Raoul said State Farm’s actions impede the Department of Insurance’s ability to ensure fair treatment for homeowners. “It prevents the Department of Insurance from obtaining information to help make sure all Illinois homeowners are being treated fairly,” Raoul said.
According to the complaint, the Department of Insurance began its examination of State Farm in November. In July, Gov. JB Pritzker criticized State Farm’s proposed 27.2% rate increase, calling it “unfair and arbitrary,” and urged lawmakers to address rising insurance costs during the fall veto session, which started this week.
State Farm has said that catastrophe-related costs, including those from tornadoes and flooding in Illinois, have exceeded the funds set aside to cover them in 13 of the past 15 years. The company maintains that these losses have contributed to the need for higher premiums.
In addition to the Illinois case, State Farm is also facing a federal lawsuit in Alabama, where policyholders allege the company used artificial intelligence and unfair claims practices to delay and deny payments.
The complaint asserts that these practices targeted elderly, disabled, and Black homeowners, resulting in delayed repairs and financial hardship. Plaintiffs in the Alabama case claim that State Farm’s Premier Service Program contractors engaged in gross negligence and filed false reports, which further delayed urgent home repairs and devalued property.
The lawsuit also alleges that State Farm exploited vulnerable policyholders by selling unnecessary or overpriced insurance products and used inaccurate credit data to deny or cancel contracts, disproportionately affecting Black and non-white customers.
A recent report from the Consumer Federation of America found that Illinois home insurance premiums increased 50% between 2021 and 2024, the second-highest jump in the country after Utah’s 59%. The national average increase was 24% during that period.
Earlier this year, Allstate, another major insurer, filed plans to raise homeowners insurance rates for Illinois customers by 14.3%. While Illinois is not typically affected by large-scale disasters like earthquakes or wildfires, the state’s relatively relaxed regulatory environment, along with increased costs for construction materials and labor, has contributed to the recent rate hikes.
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