The five largest auto insurers in Illinois have raised auto insurance rates by a whopping $527 million since January, an analysis by two consumer groups shows.
That follows rate increases of about $1.1 billion last year by the 10 largest auto insurers in Illinois.
The analysis by the nonprofit Illinois Public Interest Research Group and the Consumer Federation of America looked at auto insurance rate increases from the five largest companies in Illinois: State Farm, Allstate, Progressive, Geico and Country Financial, which together account for 62 percent of Illinois market.
The price increases come as Illinois’ historic insurance rules face new scrutiny.
In addition to being able to raise rates as they please by notifying state officials of their plans, Illinois insurers can take non-driving factors into account when setting those rates — such as gender, occupation and whether a person rents or owns a home.
Now state Rep. Will Guzzardi, D-Chicago, has introduced legislation to address those problems and crack down on insurers. Guzzardi’s bill would:
- Requiring auto insurers to get prior approval from the state to raise rates.
- Ban “excessive” insurance increases.
- Prohibit the use of a customer’s gender, marital status, age, occupation, education, home ownership, wealth, credit score, or past relationship with an insurance company in determining auto insurance rates.
It is now illegal to use race, ethnicity and religion in determining fares. This will continue under Guzzardi’s proposal as well.
But insurers will have to prove that their business practices – including marketing, underwriting, rate setting and claims processing – do not result in unfair treatment of people based on race, ethnicity, religion, disability, gender or sexual orientation.
A 2019 Sun-Times investigation used companies’ own online pricing tools to gain insight into the impact of gender, home ownership, occupation, educational attainment and zip codes on insurance prices.
Each comparison uses the same make and model of vehicle and a fictitious driver with a flawless driving record. In more than 300 tests involving seven insurance companies, the Sun-Times found frequent price differences. Female drivers are often charged higher prices than male drivers – even for the same type of car and with the same driving record. The same applies to employers and people in low-skilled jobs or with less formal education.
For people who fell into several unfortunate categories, the price quotes were as much as 33% higher – $613 more per year.
“Rates should be based on total risk and total cost,” rather than factors that penalize people who may be good drivers but have the wrong qualities, says Abe Scarr, state director of Illinois PIRG. “Part of it just comes down to values.”
Illinois, where State Farm and Allstate are based, has less regulation than some states that require prior approval for rate increases or ban non-driving factors in setting rates.
The insurance industry is preparing to fight Guzzardi’s proposal. Three industry groups — the Casualty Insurance Association of America, the Illinois Insurance Association and the National Association of Mutual Insurance Companies — endorsed the legislation. They say it “will harm consumers by reducing competition, increasing litigation and possibly raising insurance rates for Illinois drivers.
“By using the variety of rating factors currently in use, insurers can more accurately assess drivers’ risks and price their product based on the likelihood and severity of insurance claims,” the groups said.
They describe the current system as “the fairest way to set insurance rates”.
The legislation would not prevent insurers from basing individual customers’ rates on data from an app that records their driving, such as Progressive’s Snapshot program or State Farm’s Drive Safe & Save. Such “telematics” programs allow companies to know exactly what type of driver they are insuring in order to decide how to price their coverage.
Complaints abound on social media from drivers who say they’ve tried to be exemplary drivers, failed and seen their prices go up.
Now there could be more rate hikes.
Allstate — which for the past year and a half has paid more in auto insurance claims than it has received in premiums — blames inflation, citing higher repair prices and more expensive medical bills for people who are injured.
What will happen with those costs is “really anyone’s guess,” Allstate CEO Mario Rizzo told investors on Thursday’s quarterly earnings call.
“But I think our outlook is — and we’re pretty consistent on this — we’re going to continue to raise prices,” Rizzo said.