Chicago's alcohol rules.

First off tonight, Illinois homeowners could soon face a higher insurance Bill.

State Farm is raising its rates by 27% starting next month, which could cost customers an additional $475 on average.

The company says they're hiking prices because of inflation and more severe weather hitting Illinois.

But Governor JB Pritzker and consumer advocates are pushing back and calling for more home insurance regulations.

Joining us with more on the issue is a scar director of the Illinois Public Interest Research Group, a consumer advocacy organization.

We should mention.

We also invited several insurance groups, but they declined or did not respond.

State Farm did send us a statement which we will get to in just a moment.

car.

Thanks for joining us.

Thanks for having So how does a 27% increase compared to previous increases?

Because it sounds like a lot.

It's much bigger scale State Farm itself is insurance rate significantly in recent years.

But it's usually calm.

>> More 5 or 10% increments.

So this is a massive to put it.

In another perspective, it's more than half a billion dollars larger than anything we've ever seen or at least recent memory.

>> Briefly for viewers, explain how rate increases work because seems like for some people seems like it increases every year whether or the insurance agency or company makes a declaration to the state.

>> And here in Illinois, all the insurance companies have to do is file it and then they can put it into place.

There's no check.

There's no regulation on rate increases.

So as long as they file their paperwork, they're allowed to raise rates as much as they want.

And they've done that a lot.

And over the last 3 years, homeowners insurance rates in Illinois have gone up by 50% on average.

That's route from around $2000 for average customer to $3,000.

That's more than any other state.

But Utah in the last 3 years and that's before this massive state from increase, OK?

So it happens regularly, but obviously not typically to the point of 27%.

Yes, cut.

That raises a lot of eyebrows.

Sure.

>> Ok, so your group, you all been pushing for legislation that establishes a rate review process for insurance companies.

Tell us more about how that would work right now in Illinois.

It's legal to charge rates that are excessive.

Almost every state has boilerplate language in their state code that says rates.

>> Should not be excessive, inadequate or unduly discriminatory.

We don't have that language.

There's no standard that regulators could apply to challenge rate hike.

So that's the first thing we need to say that it's against the law to charge excessive insurance rates.

Then we need to give the department the authority to actually investigate these rate increase proposals into rein them in.

If they find him to be excessive, they could either reject them or modify them so that maybe wouldn't be a half-billion-dollar increase.

But nearly a 250 million dollar increase.

>> Governor Pritzker has been pushing legislators to address this and veto session that comes up in the fall.

Do you think the political will exists to take this We'll I'm hopeful.

You know, the General Assembly has passed similar reforms in the health insurance context and the last couple years.

So the department now has this authority when it comes to health insurance rate increases.

And those passed with bipartisan support, of course, Illinois is home to State Farm and Allstate who are the 2 giants of property casualty insurance.

And then a lot of sway in Springfield.

So we'll have to see.

But certainly having Governor Pritzker making this a higher priority will help.

And we're hopeful that we can get something done this fall.

What's likely impact of rate increase like this on homeowners and could all states could other insurance companies fallen as well and filed a massive rate increase?

>> they certainly can.

Again, there's nothing stopping them.

They can file any rate increase and any time without any regulatory oversight and a lot of them already You know, there's been about 215 million dollars of rate increases on top of this massive state farm so far this year.

And we're just a little over halfway through.

So we could see more coming and they have all types of impacts for customers.

A lot of people right now cost of living is a concern.

This is certainly contributes to that.

For some folks, they may have paid off their mortgage.

But, you know, the combination of high insurance costs and property taxes, challenges them to stay in their home.

And for some people, if you're a first-time homebuyer, you know, the mortgage company does require you to purchase insurance and this may be one of the things that makes it more challenging for first time home buyers to purchase that.

can people find themselves switching to may be cheaper insurance with that provides less coverage and find themselves in trouble if they need to file file a claim.

>> That's one way that people can save money is by and insurance coverage that covers Lester that has higher deductibles and that's something that seeing even with the state farm increase.

Not only are they raising rates, but there implementing a mandatory hail and wind deductible on all policy holders.

So what we're seeing in general in the industry is they're forcing us to pay more and get less.

And, you know, you can shop around and we encourage people to shop around.

But when it's a market wide problem, there's only so much you can do by shopping around and that's why we think it's appropriate for the state to have some basic consumer protections.

Virtually every other state has been Illinois, LAX to investigate these rate increases.

So the National Oceanic and Atmospheric Administration Association administration skews me reported 131 tornadoes and 142 instances.

>> Of severe hail in Illinois this year and 139 tornadoes and 303 severe hail incidents last year.

Insurance companies are saying that, you know, the severe weather which is been increased intensified by climate change is the main factor here.

Do you buy that?

Yes, I do.

I think that there's reason to believe that this rise in extreme weather is contributing.

>> To the need to rise insurance premiums using the same source the you just did.

There were 27 billion-dollar disasters in the United States in 2024, that was almost the highest number ever.

The highest was in 2023 with 2020 20 extreme weather disasters and these are impacting us here in the Midwest.

People think about the wildfires and the hurricanes because those are dramatic and of course, cause tremendous damage.

But a lot of catastrophe losses that these insurance companies are seeing come from wind and hail and tornadoes.

The type of extreme weather that impacts us here in Illinois in the Midwest.

Now just because they're that's the case doesn't mean that they necessarily should raise rates by the scale that they're doing.

And that's why we think this regulatory oversight is important in in particular because we should expect there to be ongoing increase is an ongoing extreme weather.

Unfortunately, it's the new normal.

All the more reason we should have some public oversight of these rate increases.

So as I mentioned, we do have a statement from State Farm and it says, quote, Home insurance claims costs are exceeding premiums collected in Illinois.

>> Last year, those total costs amounted to one $1.26 for every dollar in premium we collected such losses are unsustainable, accurate risk based pricing, make sure that insurers like State farm can pay claims during some of life's toughest moments for policyholders.

Or over regulation and refusal to allow companies like ours, the ability to charge accurate rates leads to a less competitive market and fewer choices for consumers.

Opponents of Pritzker's called for legislation and regulation.

They've also got their own recommendations promoting accurate pricing and strengthening homes against severe weather or extreme weather.

What do you say to the argument that a solution should focus more on addressing increased risks and less than insurance companies?

>> I think we can do both.

We do need to do more to lower risks and insurance.

When done the right way should provide cost signal price signals that inform customers about what they can do to lower their risk, which, you benefits that individual.

policyholder is well as all of us by reducing the risk we face collectively so we should be doing that.

Absolutely.

But that does not mean that there's no role for government oversight of these rate hikes.

And just to be clear, what's on the table is nothing onerous.

It's nothing extreme.

In fact, we've called for stronger regulations.

Then what has been put forward by the Department of Insurance, but we think it's a reasonable proposal that makes sense for Illinois.

And the time has come to have some basic fundamental oversight over these rate increases.

What advice do you have for consumers if they should see their their premiums are starting to go up?

>> Well, you can always shop around and I certainly encourage people to do that while being careful not to make sure that you are.

>> Putting yourself in a more risky situation or if you are doing so to understand those risks when you're doing so the other advice or have is to contact your state representative and state senator and asked them to support Governor Pritzker and his calls for Okay.

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