New Analysis: Illinois car insurance rates hiked by more than $1 billion in 2022

Top car insurance companies raised Illinois drivers’ rates by more than $1.1 billion in 2022, according to analysis released Monday by Illinois PIRG Education Fund and the Consumer Federation of America. The total increase amount was even higher; the organizations reviewed more than 200 rate filings by the top 10 car insurance companies by market share, representing roughly 80% of the market, but smaller insurers also raised rates in 2022.

Illinois-based State Farm and Allstate raised rates by the largest amounts, by $388 million and $229 million respectively.

The trend is likely to continue in 2023: on January 18th, Allstate filed its first Illinois car insurance rate hike in 2023 – a $63 million increase that will raise average customer premiums by $174 annually. 

Despite requiring that car owners purchase insurance, Illinois is one of only two states whose regulators are not empowered to reject or modify excessive rates. The other, Wyoming, is the least populous state in the nation. 

“Illinois car insurance customers deserve the same basic consumer protections most Americans take for granted,” said Illinois PIRG Education Fund Director Abe Scarr. “2022 should be the last year insurance companies can raise our rates by anywhere near — let alone more than —  a billion dollars without scrutiny from the public and regulators.”

The aggressive 2022 auto insurance rate hikes came after insurers overcharged customers during the first year of the COVID-19 pandemic. According to analysis of data released by the Illinois Department of Insurance in June 2022, the top four car insurance companies by Illinois market share — State Farm, Geico, Progressive and Allstate — made roughly $500 million more in 2020 than they would have needed to maintain 2019 profit levels. 

Responding to public pressure, the companies collectively returned about $220 million to customers in 2020. But those four companies alone still raked in a $280 million pandemic windfall. An earlier analysis by the Consumer Federation of America, which reviewed the entire Illinois auto insurance market, estimated insurers’ total 2020 post-refund Illinois windfall at $896 million, or $99 per policy holder on average.

“When Americans were stuck at home and not driving during the pandemic, insurers were able to rake in record profits because there was no oversight of their excesses,” said Douglas Heller, Director of Insurance at Consumer Federation of America. “Now insurance companies are digging deeper into customers’ pockets, but the State of Illinois does not have the laws in place to hold insurers accountable and protect consumers, even though the law requires every driver to buy coverage from these companies.”

After overcharging customers during the pandemic, Illinois’ major insurance companies rewarded top executives with generous bonuses. For example, Bloomington-based State Farm dramatically raised CEO Michael Tipsord’s annual bonuses from $8.3 million in 2019 to $18.1 million in 2020 and $22.4 million in 2021. Northbrook-based Allstate boosted its stock price by buying back more than $3.3 billion in shares, the most in a single year since 2007.

Advocates and legislators plan to introduce car insurance reform legislation in the current legislative session.

“While families in my district are struggling to meet rising costs of living across the board, insurance companies are making staggering profits and CEOs are making eight-figure salaries,” said Rep. Guzzardi. “I’m eager to work with my colleagues on making the auto insurance industry fairer and more accountable.” 

Illinois PIRG Education Fund and Consumer Federation of America reviewed more than 200 filings made by the top 10 insurance companies by 2021 Illinois market share, including subsidiaries. The analysis calculated the total premium increases, net of decreases, that went into effect for either new customers or renewals during calendar year 2022. The increases totaled more than $1,114,000,000 and impacted more than 5 million Illinois car insurance policyholders.