Illinois Homeowners Face Double-Digit Insurance Rate hikes as Climate Risk and Profits Clash
Illinois homeowners are bracing for another year of soaring insurance premiums,wiht Allstate set to increase rates by an average of 8.8% beginning February 24, 2026. This latest increase continues a troubling trend of insurers raising costs across teh state,fueled by severe weather events and escalating repair expenses,while concurrently reporting significant profits.
The planned rate hike, detailed in a recent filing with the Illinois Department of Insurance, will impact over 209,000 policyholders. allstate previously sought a 14.3% rate increase earlier in january, signaling a sustained effort to adjust pricing in the state. The upcoming increases will vary, ranging from 4.9% to 10.4%, but the typical homeowner can expect an 8.8% jump when their policy renews.
Illinois’ regulatory environment, characterized as “lightly regulated,” allows insurance companies to inform state regulators of planned increases without notable oversight to curb costs for consumers. “Illinois rates are being driven by the state’s severe weather events and higher repair costs,” a company statement explained.
However, consumer advocates are questioning the justification for these increases, especially in light of Allstate’s reported $3.7 billion profit for the third quarter of this year. “Allstate’s planned rate increase is excessive considering the company reported $3.7 billion in profit for the third quarter of this year,” said Abe Scarr, director of the nonprofit consumer group Illinois PIRG. Scarr expressed concern that other major insurers will follow suit, further burdening Illinois residents.
The impact is particularly acute given the market share held by State Farm and Allstate, collectively controlling close to half of the Illinois homeowners insurance market. This concentration means the rate increases will affect hundreds of thousands of consumers. The rising cost of insurance also poses a significant threat to homeowners struggling to meet their mortgage obligations, as coverage is often required by lenders.
State Farm already implemented a substantial 27% rate increase in Illinois over the summer, attributing it to the increasing costs associated with rebuilding and repairing homes after extreme weather. The Illinois Department of Insurance Director Ann Gillespie requested ZIP code-level data from State Farm in November 2024 to scrutinize the rate adjustments, but the insurer initially refused to comply, prompting a lawsuit filed by Attorney General Kwame Raoul in october to compel data sharing.
Even before these recent adjustments, Illinois homeowners were already experiencing significant price increases. A study released in April by the Consumer Federation of America revealed that a typical Illinois homeowner paid approximately $1,000 more for coverage in 2024 compared to 2021 – a 50% increase and the second-highest in the nation. The study focused on $350,000 worth of replacement coverage, which rose from an average annual price of $1,968 in 2021 to $2,942 in 2024.
Consumer groups are actively advocating for increased regulation of the insurance industry in Illinois, including granting regulators the authority to reject what they deem excessive rate hikes. Legislation aimed at regulating homeowners insurance rates passed the Illinois Senate last fall but ultimately stalled in the house,though it may be revisited in the coming year.
The insurance industry maintains that Illinois’ limited regulatory approach fosters a competitive marketplace. Mark Friedlander, a spokesperson for the industry-funded Insurance Facts Institute, emphasized that rates are determined by losses within each state. “Illinois homeowners are not paying for losses incurred in California from wildfires or tornadoes in Iowa,” Friedlander stated. He argued that calls for rate regulation misunderstand the underlying drivers of increasing premiums, which he attributed to escalating costs from natural disasters, inflation, and legal system challenges.
Though, Scarr countered that the industry’s focus on weather-related losses shoudl prompt greater investment in addressing climate change-a critical factor driving these increases and threatening the long-term affordability of homeowners insurance.
. The situation in Illinois underscores a growing national crisis in homeowners insurance affordability, raising questions about the balance between insurer profitability, consumer protection, and the long-term impacts of a changing climate.
