State Farm has completed a $182 million interest rate hike on Illinois auto loans that has come under criticism from a nonprofit watchdog group. The Illinois Public Interest Research Group (PIRG) said in a statement that the increase will add $58 to the average customer’s annual bill.
PIRG said last year’s rate hikes, added to those that went into effect Friday, represent a total increase of $500 million for State Farm’s customers over the past 12 months.
Allstate raised rates by $63 million in January and by $292 million since early 2022.
Illinois is one of only two states that have no federal oversight and no restrictions on rate hikes. The group and several other organizations support legislation HB2203, which gives more powers to the state’s Department of Insurance.
“In the first two months of 2023, two companies alone raised nearly a quarter billion dollars in auto insurance rates,” said Abe Scarr, director of Illinois PIRG. “It’s time to authorize the Department of Insurance to reject or modify unfair or excessive auto insurance rate increases.”
The Illinois PIRG Education Fund and the Consumer Federation of America announced that the top auto insurance companies combined have increased driver rates in Illinois by more than $1.1 billion in 2022.
“Because insurance companies use non-driving factors to set rates, massive increases in auto insurance rates have a disproportionate impact on communities like the one I represent,” said state Senator Javier Cervantes, D-Chicago, one of the sponsors of the measure.
Earlier this week, State Farm pointed to a sharp rise in premium costs when it announced record losses of more than $13 billion in its property-casualty lines last year. The losses were due to inflation-related higher payouts, State Farm said. State Farm’s net loss for the year was $6.7 billion.
Insurance industry analyst Jeff Rieder of Ward Benchmarking Services noted in early February that regulators have left insurers in many states unable to raise rates enough to offset cost increases.
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