Statement: With second 2023 car insurance rate hike, State Farm to rake in $750M more in less than two years

Illinois Legislature yet to protect customers from excessive increases

Bloomington-based State Farm finalized a $178 million Illinois car insurance rate hike last week, adding $56 to the average customer’s annual bill. This increase, which will impact more than 3 million Illinois drivers when it goes into effect in June, is on top of a $182 million rate hike in March. The two increases combined will raise the average customer’s bill by $114 annually. Combined with $388 million in State Farm rate hikes in 2022, car insurance rates for Illinois State Farm customers have gone up by almost three-quarters of a billion dollars in less than a year and a half.

State Farm, a mutual insurance company owned by its policyholders, announced a record loss in 2022. However, that did not stop the Board of Directors from rewarding CEO Michael Tipsord with $24.4 million in 2022 compensation, almost matching the record of $24.5 million set in 2021.

State Rep. Will Guzzardi, with the support of State Sen. Javier Cervantes and the Illinois Coalition for Fair Car Insurance Rates, introduced legislation to address unfair and excessive car insurance rates in February. Even though Illinois requires every car owner to buy insurance, it is one of only two states that doesn’t protect insurance customers from excessive or unfair rates. The legislation, HB2203, would empower the Illinois Department of Insurance to reject or modify excessive rate hikes and end the use of non-driving factors, such as credit scores, to set rates. The legislation, and other similar car insurance reform bills, have so far not received a hearing in the legislature this year.

In response to State Farm’s $178 million rate hike, legislators and advocates said:

“Yet again, insurance companies raise rates on families who are struggling to get by, all while lavishing its CEO with exorbitant compensation,” said Rep Guzzardi (D-39). “We need accountability for these rate hikes, and we need strong rules to protect consumers from predatory, discriminatory, and unnecessary rate increases.”

“When will these back-to-back car insurance rate hikes end, and how can Illinois consumers be confident they are getting their money’s worth?” said Illinois PIRG Director Abe Scarr. “It’s time to empower the Department of Insurance to reject or modify unfair or excessive car insurance rate hikes. The people of Illinois deserve better.”