State Farm defends Illinois home insurance price hike; Pritzker says its not justified

CHICAGO (WLS) -- The largest home insurer in Illinois is defending the looming rate hike that will impact 1.5 million State Farm customers.

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State Farm is set to raise home insurance rates by 27% beginning August 15, 2025.

The Bloomington-based insurer said the price increase comes as it anticipates more extreme weather, plus the rising repair costs from inflation.

Last year, for every dollar in premiums collected, State Farm paid out $1.26 in total costs.

The company told ABC7 its Illinois homeowners' business has seen "unsustainable" losses in 13 of the last 15 years and needs to raise rates to remain financially strong.

"In Illinois alone last year, we paid out more than $638 million in hail damage claims," State Farm spokesperson Gina Morss-Fischer said. "That was second only to the state of Texas, so these changes are taking effect today for new policies and for existing policies on August 15th."

Governor JB Pritzker said he wants the Illinois Department of Insurance to take all possible actions to combat this.

"In total, these changes will cost Illinois homeowners hundreds of additional dollars per year without a state-based justification or corresponding increases in protection," Pritzker said in a statement.

The governor called on the general assembly to pass a bill during veto session.

The Illinois Department of Insurance issued the following statement:

"The Illinois Department of Insurance has requested information specific to State Farm's rate filing, which raised serious questions as to whether their specific rate increases were based solely on Illinois experience.

We requested further information from State Farm to provide greater transparency into their market practices, but they have repeatedly refused to provide the requested information."

State Farm issued the following statement:

"Illinois families deserve an honest conversation about insurance economics rather than political rhetoric. Governor Pritzker's statements are factually incorrect. State Farm does not shift costs between states, and we have provided information to the Illinois Department of Insurance to demonstrate this fact. Our Illinois rates reflect Illinois-specific claims and risks.

The facts are simple: State Farm's Illinois homeowners business has lost money in 13 of the past 15 years, including paying out $1.26 for every dollar collected in 2024. These losses are driven in part by severe weather damaging communities across the state. No company can absorb such losses forever and still be there for customers when disaster strikes.

State Farm has called Illinois home for more than a century. More than 21,000 people in Illinois proudly serve customers as State Farm agents, agent team members and State Farm employees. Our commitment is to keep rates competitive while staying financially strong-so we can deliver on our promises when people need us most.

We value our partnerships with state leaders and continue to work together toward finding solutions that allow us to continue serving customers and promote a healthy and competitive insurance market."

Gov. Pritzker released the following statement:

"I am deeply concerned by State Farm's unfair and arbitrary insurance rate hike on Illinois homeowners.

"These increases are predicated on catastrophe loss numbers that are entirely inconsistent with the Illinois Department of Insurance's own analysis - indicating that State Farm is shifting out-of-state costs onto the homeowners in our state. Hard-working Illinoisans should not be paying more to protect beach houses in Florida.

"In addition to increased premiums, State Farm intends to raise out-of-pocket deductibles and reduce payouts for certain claims. In total, these changes will cost Illinois homeowners hundreds of additional dollars per year without a state-based justification or corresponding increases in protection.

"Over the past six years, our state economy has flourished based on transparent markets and fair competition. State Farm's actions are antithetical to the core principles that the Illinois business community is built on.

"Today, I'm directing the Illinois Department of Insurance to take all available regulatory action to enforce the law and ensure a level playing field for Illinois homeowners.

"I also am calling on the General Assembly to enact a legislative solution during veto session that prevents insurance companies from taking advantage of consumers through severe and unnecessary rate hikes like those proposed by State Farm."