Allstate auto insurance rates jump 14% in Illinois

Allstate raised auto insurance rates by 14% in Illinois last month, dramatically outpacing the national average and the inflation rate. State Farm wasn’t far behind, increasing rates by more than 8% for Illinois drivers in August.

The Allstate premium increase, announced Thursday, averaged about 3.2% across the U.S., according to the Northbrook-based insurer.

For the year, Allstate has increased auto insurance rates by 26% for Illinois drivers, far above the national average of about 10%, spokeswoman Mallory Vasquez said in an email. With the consumer price index up 8.3% through August, inflation alone doesn’t account for Allstate’s sharp rate hikes in Illinois and other states.

“We evaluate the frequency and severity of accidents at a state level,” Vasquez said. “Beyond inflation, some of the factors driving losses up in Illinois are the same things impacting the rest of the country: miles driven have gone back up to pre-pandemic levels, vehicle collisions are more severe, speed of driving, distracted driving. Illinois is one of the top states for vehicle theft.”

Other states that saw higher-than-average rate hikes 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 rate increases with the state’s Department of Insurance this year, a dramatic shift from the rebates and rate cuts that proliferated during the pandemic lockdown in 2020.

Bloomington-based State Farm, the state’s largest auto insurer, increased Illinois insurance rates by 8.4% last month, which followed a 3% increase in June. In March, State Farm implemented a 4.8% rate hike for Illinois drivers.

In 2020, State Farm cut auto insurance rates in the state by 13.7% as many drivers parked their cars at the onset of the COVID-19 pandemic. In February 2021, State Farm reversed course, raising rates by 4.2% and taking a “measured approach” to rate increases, State Farm spokeswoman Gina Morss-Fischer said in an email.

“As more people are on the roads, we’re seeing an increase in claims,” Morss-Fischer said. “Auto claim costs are being compounded by record inflation and supply chain disruptions. All of this has increased the cost of labor and materials, which translates to higher auto repair costs.”

Likewise, Allstate issued about $1 billion in rebates to auto policyholders nationwide at the onset of the pandemic, and cut rates in Illinois by about 5% in January 2021. But Allstate began bumping rates back last September, and went big in January when it filed for a 12% increase, essentially unwinding its rate cuts from the previous two years. With the August increase, Allstate’s insurance rates are significantly higher than pre-pandemic levels.

Nationally, Allstate has collected $2.5 billion in increased auto insurance premiums year-to-date, the company said.

Auto insurance rates could go higher down the road. A June report by S&P Capital IQ said private auto insurers “besieged by the impact of inflation on vehicle repair and replacements costs” swung to an underwriting loss last year as severe traffic accidents spiked. But auto insurance carriers’ “aggressive responses” to rising costs will sustain premium growth at “elevated levels” in 2023, the report said.

Another factor contributing to higher insurance rates across the industry is an explosion in catalytic converter thefts, as the valuable pollution-control device becomes an increasing target for resale on the black market.

Last year, State Farm paid $62.6 million for 32,265 catalytic converter theft claims, a 13-fold increase since 2019. The pace is accelerating this year, with $50 million paid for 23,570 claims through the first six months, according to the company.

Illinois ranked third in the nation 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 has already paid out more in Illinois than all of last year, with $3.5 million for 1,912 catalytic converter theft claims.