State Farm Raises Illinois Home Insurance Rates 27% Amid Regulatory Push

State Farm is raising homeowners insurance rates in Illinois by 27%, adding approximately $746 annually to the average policyholder's bill due to unsustainable underwriting losses driven by inflation and increasing severe weather events. Illinois faces significant climate risks, including numerous tornadoes and hail incidents, resulting in the insurer paying out $1.26 in claims for every $1 collected in premiums, with last year's hail damage claims in Illinois second only to Texas. The rate hike has prompted Illinois Governor J.B. Pritzker to criticize the increase as unfair and called for regulatory reforms, including legislation to cap annual rate hikes and establish an insurance rate review process to protect consumers. Illinois currently lacks such a review system, which allows insurers to raise rates without state approval, a situation that advocates argue should change to prevent unjustified rate increases. Proposed legislation, such as bill SB0268, aims to require insurer requests for rate hikes to be reviewed and approved by the Department of Insurance, including public notice requirements for increases above 10%. The debate highlights tensions between insurer profitability amid climate risks and consumer protection in a hardening insurance market.