Allstate, State Farm auto insurance coverage charges up in Illinois. Each firms say inflation is guilty. | State and Regional
CHICAGO — Allstate raised auto insurance coverage charges by 14% in Illinois final month, dramatically outpacing the nationwide common and the inflation fee. State Farm wasn’t far behind, growing charges by greater than 8% for Illinois drivers in August.
The Allstate premium improve, introduced Thursday, averaged about 3.2% throughout the U.S., in response to the Northbrook-based insurer.
For the yr, Allstate has elevated auto insurance coverage charges by 26% for Illinois drivers, far above the nationwide common of about 10%, spokeswoman Mallory Vasquez stated in an e-mail. With the buyer value index up 8.3% by August, inflation alone doesn’t account for Allstate’s sharp fee hikes in Illinois and different states.
“We consider the frequency and severity of accidents at a state stage,” Vasquez stated. “Past inflation, among the elements driving losses up in Illinois are the identical issues impacting the remainder of the nation: miles pushed have gone again as much as pre-pandemic ranges, car collisions are extra extreme, pace of driving, distracted driving. Illinois is likely one of the prime states for car theft.”
Different states that noticed higher-than-average fee hikes by Allstate in August embrace New Mexico, Texas, Massachusetts, New Hampshire, Oregon, Arizona, Pennsylvania and Florida, the corporate stated.
State Farm, Allstate and Progressive — the three largest auto insurers in Illinois — all filed for fee will increase with the state’s Division of Insurance coverage this yr, a dramatic shift from the rebates and fee cuts that proliferated through the pandemic lockdown in 2020.
Bloomington-based State Farm, the state’s largest auto insurer, elevated Illinois insurance coverage charges by 8.4% final month, which adopted a 3% improve in June. In March, State Farm carried out a 4.8% fee hike for Illinois drivers.
In 2020, State Farm minimize auto insurance coverage charges within the state by 13.7% as many drivers parked their automobiles on the onset of the COVID-19 pandemic. In February 2021, State Farm reversed course, elevating charges by 4.2% and taking a “measured strategy” to fee will increase, State Farm spokeswoman Gina Morss-Fischer stated in an e-mail.
“As extra persons are on the roads, we’re seeing a rise in claims,” Morss-Fischer stated. “Auto declare prices are being compounded by file inflation and provide chain disruptions. All of this has elevated the price of labor and supplies, which interprets to increased auto restore prices.”
Likewise, Allstate issued about $1 billion in rebates to auto policyholders nationwide on the onset of the pandemic, and minimize charges in Illinois by about 5% in January 2021. However Allstate started bumping charges again final September, and went large in January when it filed for a 12% improve, primarily unwinding its fee cuts from the earlier two years. With the August improve, Allstate’s insurance coverage charges are considerably increased than pre-pandemic ranges.
Nationally, Allstate has collected $2.5 billion in elevated auto insurance coverage premiums year-to-date, the corporate stated.
Auto insurance coverage charges might go increased down the street. A June report by S&P Capital IQ stated personal auto insurers “besieged by the affect of inflation on car restore and replacements prices” swung to an underwriting loss final yr as extreme site visitors accidents spiked. However auto insurance coverage carriers’ “aggressive responses” to rising prices will maintain premium progress at “elevated ranges” in 2023, the report stated.
One other issue contributing to increased insurance coverage charges throughout the business is an explosion in catalytic converter thefts, as the precious pollution-control gadget turns into an growing goal for resale on the black market.
Final yr, State Farm paid $62.6 million for 32,265 catalytic converter theft claims, a 13-fold improve since 2019. The tempo is accelerating this yr, with $50 million paid for 23,570 claims by the primary six months, in response to the corporate.
Illinois ranked third within the nation for State Farm catalytic converter claims in 2021, with $3.1 million paid for 1,985 thefts. Within the first six months of 2022, State Farm has already paid out extra in Illinois than all of final yr, with $3.5 million for 1,912 catalytic converter theft claims.
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