The Insurance Information Institute (Triple-I) has released a new Issues Brief addressing recent calls in Illinois for legislative intervention in homeowners’ insurance underwriting and pricing.
The report warns that such measures could reduce both the affordability and availability of coverage in the state.
Triple-I’s analysis points to rising insurance premiums nationwide, but notes that Illinois homeowners’ insurance remains more affordable than the national average and nearly as accessible as in Utah, the most affordable state.
The report attributes premium increases to factors such as climate-related disasters, demographic changes, rising labor and material costs, and global inflation, all of which have contributed to higher rebuilding expenses and claims costs.
The debate over insurance regulation in Illinois has intensified following State Farm’s decision to implement a 27.2% increase in homeowners’ insurance rates, affecting about 1.49 million policyholders.
Gov. JB Pritzker (pictured left) has urged lawmakers to grant new oversight powers to the state’s insurance regulator in response to the rate hike, which is projected to generate $522.8 million in additional written premium.
State Farm has defended the increase, saying that it is to counter underwriting losses from severe weather events and a loss ratio of $1.26 paid out for every $1 collected in 2024. The company reported that its Illinois homeowners’ business has posted underwriting losses in 13 of the past 15 years, citing the impact of more frequent and severe weather events.
“While calls for rate regulation may appear politically appealing, it is critically important to appreciate that recent increasing insurance rates are a reflection of the risk, rather than the cause,” said Sean Kevelighan (pictured right), CEO of Triple-I.
He added that premium increases are driven by genuine and rising costs, including natural disasters, inflationary pressures, and misuse of the legal system. He also noted that Illinois residents pay less than the national average for insurance, which points to a relatively stable market with strong competition.
“Any attempts to artificially manipulate actuarially proven pricing methods would only put the state’s market in jeopardy, as we are seeing in other states,” he said.
The report cautions that legislative proposals limiting insurers’ ability to set rates based on risk could reduce market participation and coverage options for Illinois residents, as has occurred in other states.
Instead, Triple-I recommends that Illinois focus on risk mitigation, investment in supportive infrastructure, and reforms to address lawsuit abuse. The organization points to strategies used successfully in other jurisdictions as models for constructive alternatives.
Illinois’ property and casualty insurance sector remains a significant contributor to the state’s economy. In 2021, the sector contributed approximately $41.9 billion to Illinois’ gross domestic product, supported more than 155,000 direct jobs, and provided funding for public infrastructure through bond investments.
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