Homeowners Premiums Soar In Illinois

Homeowners insurance premiums have skyrocketed in Illinois, making the state stand out from others dealing with soaring property insurance costs, because they’re all near the coasts and more prone to natural disasters.

Illinois, along with Texas, Arizona, North Carolina, Oregon and Utah, have seen homeowners premiums rise between 20 and 30 percent since the start of 2022, the Wall Street Journal reported.

Since the start of last year, 31 states have undergone double-digit rate increases, and no state is immune to the trend, according to Lauren Menuey, managing director of Goosehead Insurance.

“We’re seeing moves to put more of the risk back onto the homeowner, tougher underwriting restrictions and big rate increases,” she told the outlet.

Natural disasters, like storms and wildfires, compounded with inflation and chaotic supply chain issues have led to a massive influx of claims. Despite large rate hikes, many insurers are still struggling to stay afloat.

While natural disasters aren’t as common in Illinois as states like California and Texas, tornadoes pose a risk. However, such weather-related incidents typically happen in lightly populated areas, limiting claims costs for insurers, Crain’s reported.

Unlike many states, Illinois law does not require prior approval of rate changes before they get implemented, nor does it provide a mechanism for regulatory objection to insurance rate hikes, leading to one of the most lenient insurance rate regulation systems in the country.

Industry experts are concerned that insurers may be capitalizing on this regulatory laxity to implement rate increases in excess of what is necessary. In recent years, insurers have grappled with record-breaking natural catastrophe losses, with $275 billion paid out over the past three years in the United States. Through the first half of 2023, there were $40 billion in losses, the third-highest in history, the outlets reported.

In 2022, the top five homeowners insurers in Illinois held a 67 percent market share. Major insurers in the state have significantly increased premiums. Allstate, for instance, has raised rates by an average of nearly 23 percent this year. Farmers Insurance, another prominent insurer in Illinois, has raised its rates by 25.4 percent since December 2021.

— Quinn Donoghue