State Farm plans to raise homeowners insurance rates by 27.2% in Illinois, adding approximately $746 to policyholders' annual premiums. This increase comes amidst a political uproar as nearly 1 in 7 homes nationwide lack insurance due to affordability issues. State Farm cites climate-related losses and rising construction costs as reasons for the hike. The insurer's analysis indicates a pattern of catastrophe losses exceeding projections in 13 of the last 15 years, resulting in a shortfall in risk-based pricing. Furthermore, hail damage has significantly impacted claims and overall pricing viability.
State Farm's 27.2% rate hike is a necessary correction after years of climate-fueled losses and rising construction costs, indicating persistent shortfalls in risk-based pricing.
For every $1 collected from Illinois homeowners in 2024, State Farm paid out $1.26 in claims and costs; in 2023, that figure was even higher at $1.30.
The biggest culprit behind rising rates is hail damage; State Farm reported $638 million in hail damage claims in Illinois last year, a significant factor in increased premiums.
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