State Farm hikes car insurance rates in Illinois again – Finance News

on Jul6

6 July 2017 | 10:30 am

After hiking auto-insurance rates last year by the most in more than a decade, State Farm is following up with a smaller bite at the apple this year. The insurer of about one in every three Illinois drivers will increase rates on average 2.2 percent beginning in September.

The increase follows a 5.8 percent jump that took effect last Halloween. The Bloomington-based insurer hadn’t raised prices for drivers by that much in 14 years.

With its overwhelming market share, State Farm’s 8 percent in average price increases in 11 months is a substantial hit to everyday motorists in Illinois.

“Claim costs continue to rise in Illinois, and have been rising for several years,” spokeswoman Missy Dundov wrote in an email.

In 2016, State Farm posted the largest nationwide auto-underwriting loss in its 95-year history. Like other auto major insurers around the country, State Farm has justified price increases by citing an increase in car accidents, brought on in part by distracted driving.

“Our concern (about distracted driving) has grown, as it has likely become a greater loss exposure,” Dundov wrote. “Increased phone usage, enhanced technology and various other distractions now accessible or available in vehicles are all contributing factors.” Relatively low gas prices and an improved economy have people driving more, too, she said.

The rate hikes aren’t affecting all State Farm drivers the same. More than 142,000 of State Farm’s 2.8 million auto policyholders in Illinois are insured by its State Farm Fire & Casualty unit rather than the typical State Farm Mutual Automobile Insurance. Drivers insured by State Farm Fire & Casualty are those whose risks cannot be “accommodated” by State Farm Mutual. The company won’t elaborate on what that means.

But the policyholders will see an 8.1 percent average hike. The State Farm Mutual customers will pay 1.7 percent more on average, according to filings with the Illinois Department of Insurance.

Even after the hefty rise in rates last year, State Farm added to its leading market position in Illinois. State Farm Mutual Auto has 2.73 million policyholders now versus 2.71 million last September, according to state filings.



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