State Farm, Allstate blame smart cars for insurance rate increases

Dec. 14--State Farm's recent 5.9 percent increase in Illinois auto insurance rates was driven in part by smart car technology, the company said Wednesday.

A dinged front bumper becomes a more expensive repair when it also includes fixing a collision avoidance sensor.

"Cars are just getting more expensive to repair, due to the technology," said Missy Dundov, a spokeswoman for Bloomington-based State Farm, the nation's largest auto insurer.

The rate increase went into effect on Oct. 31, affecting 1 in 3 drivers in Illinois. It was largest such increase since 2003, when State Farm raised rates for some Illinois policyholders by an average of 14.1 percent, Dundov said.

Beyond technology, lower gas prices have encouraged more people to hit the road, resulting in more collisions, Dundov said. Trends such as distracted driving also have contributed to higher claim costs, according to State Farm.

"We've just seen a huge increase in what it costs to pay out our claims," Dundov said.

State Farm already raised Illinois auto insurance rates by 2.7 percent in February. The increases are a projection of what the insurance company will need to pay to cover repairs going forward, Dundov said.

The company is not alone in bumping up auto insurance rates for Illinois drivers. Geico plans to raise its car insurance rates for Illinois policyholders next year by an average of 3.5 percent, according to state records. The change is effective Feb. 6.

Like State Farm, Geico also saw increases in the number of collisions and the costs of repairs last year, according to company filings.

Northbrook-based Allstate increased Illinois auto insurance rates by an average of 6.9 percent in June, also due in part to the rising costs associated with repairing smart car technology, the company said Wednesday.

"Now we're not just replacing a bumper for a fender-bender, we're replacing the cameras or the sensors in that bumper," said Meghan Sporleder, an Allstate spokeswoman. "We're seeing newer, more sophisticated models costing much more to repair, especially with some of the more advanced safety features."

Allstate will continue to monitor claim costs to determine if an additional rate increase is necessary in the coming months, Sporleder said.

While insurance rates are rising, both State Farm and Allstate said the value of new safety technology is worth it.

"We absolutely support technology that saves lives and minimizes injuries," Sporleder said. "But that comes at an increased cost."

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