Illinois homeowners’ insurance premiums up 50% over three years, according to new report

While homeowners’ insurance premiums have been rising sharply in the post-pandemic landscape across the U.S. — from wildfire-ravaged California to hurricane-flooded North Carolina — rates are increasing faster in Illinois than all but one other state.

A new report released Tuesday by the Consumer Federation of America showed homeowners’ premiums increased nationally by an average of 24% over the past three years, driven in large part by climate change-related weather events.

But beyond the extreme weather coastal hotspots that garner so much attention, rates in Illinois went up 50% between 2021 and 2024, second only to Utah, which saw a 59% increase, according to the report.

“A lot of the focus and attention has been on the coast, and understandably so, and there are big problems there, but a lot of the actual losses in extreme weather are happening in every part of the country, including here in the Midwest,” said Abe Scarr, director of Illinois PIRG, a nonprofit consumer advocacy organization.

Scarr, who participated in a CFA news conference Tuesday, pointed to the annual report filed by Allstate with the Securities and Exchange Commission in February, which showed wind/hail and tornado damage represented 79% of the catastrophic losses for the Northbrook-based insurance giant last year.

Nationwide, insurance companies have increased premiums in 95% of U.S. ZIP codes between 2021 and 2024, according to the CFA report. Florida saw the greatest dollar increase in annual premiums, up an average of $2,118, and remains the most expensive state to insure a home at $9,462 per year, the report found.

The average annual premium nationwide is $3,303, according to the study.

Illinois is in the middle of the pack in terms of annual cost to insure a home at $2,942, but the 50% rate increase over three years is a “worrisome” trend, Scarr told the Tribune.

In addition to Utah and Illinois, the states with the greatest three-year percentage increase in premiums were Arizona at 48% and Pennsylvania at 44%. After Florida, the states with the biggest dollar hikes in premiums were Louisiana at $1,775 and Kentucky at $1,426, according to the report.

Nationally, the CFA study found the 24% average home insurance rate increase more than doubled the 11% cumulative inflation between 2021 and 2024.

The report cited the cost of building materials and labor in the post-pandemic economy, stronger and more frequent extreme weather events and the unregulated global reinsurance market — insurance for the insurance companies — as the prime drivers of rate increases that have created an affordability crisis for homeowners.

In addition to the economic and meteorological factors, the political climate also contributes to home insurance rate increases, where “state regulators generally do not adequately review insurance rate increases and determine if they are excessive,” according to the CFA report.

That problem may be particularly acute in Illinois, according to Scarr.

“It’s far easier to raise rates here in Illinois than anywhere else, because they don’t have to ever justify their rate increases and don’t have any threat that their rate increase will be rejected or modified by regulators,” Scarr said.

Illinois PIRG supports legislation pending in Springfield that would regulate home and auto insurance rates to not be “excessive, inadequate or unfairly discriminatory,” but Scarr is not particularly optimistic about its prospects for passage.

Meanwhile, Allstate increased homeowners’ insurance rates in Illinois by 14.3% beginning in February. Last year, Allstate raised homeowners’ insurance rates in Illinois by 12.7%, while Bloomington-based State Farm implemented a 12.3% increase in May.

Unfortunately, Illinois homeowners socked with double-digit annual insurance premium increases may have little recourse other than to shop around for the best rates and perhaps reinforce their property to better weather upcoming storms, Scarr said.

“Ultimately, this is why we do need some more regulation, because it’s just not something that individual policyholders have the power to do all on their own,” Scarr said. “We think the state has a responsibility to protect consumers.”

rchannick@chicagotribune.com

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