Allstate auto insurance rates increase 14% in Illinois.  State Farm is up more than 8%.  Both companies say inflation is to blame.

Allstate raised auto insurance rates 14% in Illinois last month, dramatically outpacing the national average and the rate of inflation. State Farm was not far behind, raising rates by more than 8% for Illinois drivers in August.

Allstate’s premium increase, announced Thursday, averaged around 3.2% in the US, according to the Northbrook-based insurer.

For the year, Allstate has increased auto insurance rates by 26% for Illinois drivers, well above the national average of about 10%, spokeswoman Mallory Vasquez said in an email. With the consumer price index up 8.3% through August, inflation alone doesn’t explain Allstate’s sharp rate hikes in Illinois and other states.

“We evaluated the frequency and severity of accidents at the state level,” Vasquez said. “Beyond inflation, some of the factors driving losses in Illinois are the same as those affecting the rest of the country: miles driven are back to pre-pandemic levels, vehicle crashes are more severe, speed driving, distracted driving. Illinois is one of the top states for vehicle theft.”

Other states that saw above-average rate increases by Allstate in August include New Mexico, Texas, Massachusetts, New Hampshire, Oregon, Arizona, Pennsylvania and Florida, the company said.

State Farm, Allstate and Progressive, the three largest auto insurers in Illinois, filed for rate increases with the state Department of Insurance this year, a dramatic reversal from the rebates and rate cuts that proliferated during the pandemic lockdown in 2020.

Bloomington-based State Farm, the state’s largest auto insurer, raised Illinois insurance rates by 8.4% last month, after a 3% increase in June. In March, State Farm implemented a 4.8% rate increase for Illinois drivers.

In 2020, State Farm reduced auto insurance rates in the state by 13.7% as many drivers parked their cars at the start of the COVID-19 pandemic. In February 2021, State Farm changed course, raising rates by 4.2% and taking a “measured approach” to raising rates, State Farm spokeswoman Gina Morss-Fischer said in an email.

“As more people are on the roads, we see an increase in claims,” Morss-Fischer said. “Auto claim costs are compounded by record inflation and supply chain disruptions. All of this has increased the cost of labor and materials, which translates into higher car repair costs.”

In addition, Allstate issued about $1 billion in refunds to auto policyholders across the country at the start of the pandemic, and cut rates in Illinois by about 5% in January 2021. But Allstate started raising rates last September, and it went big in January when he asked for a 12% increase, essentially canceling his rate cuts of the previous two years. With the August increase, Allstate’s insurance rates are significantly higher than pre-pandemic levels.

Nationwide, Allstate has raked in $2.5 billion in higher auto insurance premiums so far this year, the company said.

Auto insurance rates could go higher in the future. A June report from S&P Capital IQ said private auto insurers “beset by the impact of inflation on vehicle repair and replacement costs” posted underwriting losses last year as serious traffic accidents rose. But auto insurance companies’ “aggressive responses” to rising costs will keep premium growth at “elevated levels” in 2023, according to the report.

Another factor contributing to higher insurance rates throughout the industry is a explosion in catalyst theftsas the valuable pollution control device becomes an increasing target for resale on the black market.

Last year, State Farm paid $62.6 million for 32,265 catalytic converter theft claims, a 13-fold increase from 2019. The pace is picking up this year, with $50 million paid for 23,570 claims in the first six months, according to the company. .

Illinois ranked third in the nation for State Farm catalytic converter claims in 2021, with $3.1 million paid for 1,985 thefts. In the first six months of 2022, State Farm has already paid out more in Illinois than all of last year, with $3.5 million for 1,912 catalytic converter theft claims.

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