Allstate raised auto insurance rates by 14% in Illinois last month, significantly outpacing the national average and inflation rate. State Farm wasn’t far behind, increasing rates by more than 8% for Illinois drivers in August.
The average increase in Allstate’s premium, announced Thursday, was about 3.2% across the United States, according to the Northbrook-based insurer.
Over the year, Allstate increased auto insurance rates by 26% for Illinois drivers, well above the national average of about 10%, company spokeswoman Mallory Vasquez said in an email. With CPI up 8.3% through August, inflation alone doesn’t represent a sharp rise in interest rates in Allstate in Illinois and other states.
“We are evaluating the frequency and severity of incidents at the state level,” Vasquez said. “In addition to inflation, some of the factors driving up losses in Illinois are the same things that are affecting the rest of the country: mileage is back to pre-pandemic levels, vehicle collisions are more serious, driving speed, and distracted driving. Illinois is one of the best states regarding vehicle theft.”
Other states that saw above-average price increases by Allstate in August include New Mexico, Texas, Massachusetts, New Hampshire, Oregon, Arizona, Pennsylvania and Florida, the company said.
State Farm, Allstate and Progressive — the three largest auto insurers in Illinois — all filed for a rate increase with the state Department of Insurance this year, a major shift from the cuts and rate cuts that have proliferated during the pandemic shutdown in 2020.
Bloomington-based State Farm, the state’s largest auto insurer, increased insurance rates in Illinois by 8.4% last month, which followed a 3% increase in June. In March, the state farm implemented a 4.8% increase in Illinois drivers’ rates.
In 2020, State Farm cut state auto insurance rates by 13.7% as many drivers parked their cars at the start of the COVID-19 pandemic. In February 2021, State Farm spokeswoman Gina Morse Fisher said in an email that State Farm reversed course, raising rates by 4.2% and taking a “calculated approach” to increasing prices.
“As more people are on the roads, we are seeing an increase in claims,” Morse Fisher said. “Car claims costs are exacerbated by record inflation and supply chain disruptions. All of this has increased the cost of labor and materials, which translates into higher auto repair costs.”
Similarly, Allstate issued about $1 billion in discounts to auto insurance policyholders across the country at the start of the pandemic, and cut interest rates in Illinois by about 5% in January 2021. But Allstate started raising rates last September, and it got big in January When it made a 12% increase, essentially canceling the interest rate cuts from the past two years. With the August increase, Allstate insurance rates are well above pre-pandemic levels.
Nationally, Allstate has raised $2.5 billion in increased auto insurance premiums since the beginning of the year, the company said.
Car insurance rates could go up in the future. A report in June by S&P Capital IQ said that private auto insurers “trapped by the impact of inflation on vehicle repair and replacement costs” turned to an underwriting loss last year as severe traffic accidents rose. But the report said auto insurers’ “strong reaction” to rising costs would keep premium growth at “high levels” in 2023.
Another factor contributing to rising insurance rates across the industry is the explosion in catalytic converter thefts, with the valuable pollution control device becoming a growing target for black market resale.
Last year, State Farm paid $62.6 million for 32,265 catalytic converter theft claims, a 13-fold increase since 2019. The pace is picking up this year, with $50 million paid for 23,570 claims during the first six months, according to the company.
Illinois ranked third in the state for State Farm catalytic converter claims in 2021, with $3.1 million paid for 1,985 thefts. In the first six months of 2022, State Farm actually paid more in Illinois than in the whole of last year, with $3.5 million for 1,912 catalytic converter theft claims.
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